ENG-2000 — Page 257

HOUSING

Buy or Rent Option

The Buy or Rent Option was launched by the HKHA in July 1999 to allow prospective public rental housing tenants, who are eligible for flat allocation within one year, the alternative option of owning their own homes. This initiative is also open to tenants affected by redevelopment and clearances as well as eligible junior civil servants. As an alternative, an eligible purchaser may opt to receive a mortgage subsidy of up to $162,000 over a period of six years. So far, 2 080 flats have been sold, including about 1 400 households receiving mortgage subsidies.

Replacing a Proportion of Subsidised Home Ownership Flat Production with Loan Finance

To allow a wider choice to prospective home buyers, to make better use of public resources and to respond more effectively to short-term fluctuations in housing demand, the Government has embarked on a partial shift in the provision of housing assistance from the conventional 'bricks and mortar' approach to the use of housing loans to purchase flats in the private sector. Agreement was reached with the HKHA to reduce subsidised home ownership flat production by 4 000, 5 000, 6 000 and 6 000 units respectively in each of the four years from 2003-04 to 2006-07. This programme will be reviewed and rolled forward annually. Housing loans will be provided to eligible households to replace the reduction in flat production.

Public Rental Housing

At present, about 2.1 million people or 31 per cent of Hong Kong's population live in public rental housing estates managed by the HKHA or the HKHS. It is the Government's policy to ensure that these flats are allocated only to families in genuine need. At the end of December 2000, there were 109 633 households on the Waiting List for public rental housing, including 16 200 singletons.

The current average waiting time for public rental housing is 4.7 years, and the Government has undertaken to reduce the average waiting time to three years by 2003, two years ahead of the original schedule.

Rent Policy

1

Tenants' affordability is the key factor in considering rent levels of public rental flats. There is a statutory requirement that rents for existing estates cannot be adjusted more frequently than every three years, and that the overall Median Rent-to-Income Ratio for all estates following rent adjustment should not exceed 10 per cent. Other factors taken into consideration include estate value, inflation, rates, and maintenance and management charges. Public housing rents include rates and tenants pay, on average, 37 per cent of the assessed market rent (inclusive of rates) for the flats they are living in.

Rent Assistance

Public housing tenants facing temporary financial hardship may apply for a 50 per cent rent reduction under the Rent Assistance Scheme operated by the HKHA. At the end of December 2000, 5 810 households benefited from this scheme.

205