Experts say housing plan has shaky foundations
Updated: 2015-11-10 07:54
By Shadow Li in Hong Kong(HK Edition)
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Think tank's proposal 'may help the wrong people and burden the Treasury'
A new subsidized home ownership scheme which it is claimed would enable 80 percent of the city's residents to buy their own homes has been given a frosty reception by scholars and industry stakeholders - who warn the scheme could be an unacceptable burden on the Treasury.
In the think tank Our Hong Kong Foundation's first report on housing released on Monday, it proposed a system of unified subsidized flats to replace the two distinct options currently available - public housing units and home ownership flats.
Under the proposed scheme, the flats would be sold to tenants at a price fixed on the day of occupation - which could be as low as half the market price and would remain unchanged regardless of market fluctuations.
The foundation maintains this rent-to-buy arrangement would ensure that low-income families could enjoy government-guaranteed, 90-95 percent mortgages.
That means a home worth HK$4 million could be sold to the tenants after a fixed number of years' occupation at HK$2 million. Low-income tenants would only need to come up with 5 percent of the purchase price - around HK$100,000 - in order to make the down payment.
Unlike with existing Home Ownership Scheme flats, the premium would not vary with market changes. The flats would also be subject to restrictions on being sold within a fixed number of years.
Four premium-payment methods were suggested by the think tank, including one that proposes zero premium payment after five years' occupation.
Professor from the School of Economics and Finance at the University of Hong Kong Richard Wong Yue-chim, co-author of the proposal, said he hoped the scheme was an important step toward finding a long-term solution to the housing shortage in Hong Kong.
But Secretary for Transport and Housing Anthony Cheung Bing-leung responded by saying there was still a need to maintain the existing system with two different kinds of subsidized flats.
Shih Wing-ching, the founder of Centaline Property Agency, one of the city's largest property firms, said the scheme was mistakenly positioned to help some people to buy homes and make a profit on their investment. Shih countered that social welfare policy should only aim to provide affordable shelters to those in need.
Shih added that the scheme would turn out to be a huge burden for the government. He warned that to achieve the foundation's goal, a large chunk of taxpayers' money would go toward assisting a minority of the population in buying flats. Only 30 percent of Hong Kong's 7.2 million residents live in public rental flats, while 50 percent own private flats.
However, the scheme includes a proposal for a means test for eligible tenants. This would seek to ensure that only a proportion of people benefited from the scheme while others, especially the middle class, would be excluded.
Shih, who suspected the scheme would be a misuse of taxpayers' money, questioned whether the new proposal would lead to unfair advantages for those who bought home ownership flats and could pay the premium to resell.
Echoing Shih, Associate Professor at the City University of Hong Kong's Department of Public Policy Lau Kwok-yu said he believed the proposal for discounted subsidized flats - with prices that cannot even cover the land development and construction costs - was not feasible fiscally.
The foundation, chaired by former chief executive Tung Chee-hwa, is a think tank tasked to find solutions for multiple problems society is facing.
(HK Edition 11/10/2015 page7)