24 October 2018
Secretary for Transport and Housing Frank Chan Fan says his proposed 'legal subdivided flats' could be in the form of existing subdivided flats or hostels. Photo: HKEJ
Secretary for Transport and Housing Frank Chan Fan says his proposed 'legal subdivided flats' could be in the form of existing subdivided flats or hostels. Photo: HKEJ

Think outside the box on subdivided flats

Earlier this month, during a visit to a ghetto in Sham Shui Po, Secretary for Transport and Housing Frank Chan Fan suggested that the government provide funding for non-profit organizations to furnish affordable, safe, hygienic and not-for-profit subdivided flats for low-income families.

It was only a rough idea when Chan proposed it. However, after weeks of contemplation and fine-tuning, it appears the idea has taken shape in his mind. Recently, he has begun to come up with more details about his plan.

According to Chan, these “legal subdivided flats”, once launched, could be either in the form of existing subdivided flats that are commonly found across Hong Kong, or in the form of hostels where several families would share the same kitchen and bathroom.

Such hostel-like subdivided flats proposed by Chan are reminiscent of the set of the 1973 hit movie The House of 72 Tenants.

Chan also said his team is working aggressively to approach charity organizations which might be interested in the program as well as several small real-estate developers and landlords who own tenements in urban areas that are suitable as subdivided flats.

Once all sides reach an agreement on the partnership, Chan said he is hopeful that the government would be able to turn “a hundred or so” of these flats into decent subdivided units of roughly a hundred square feet each.

Chan went on to say that these flats, once available, would be mainly intended for low-income families which are on the waiting list for Public Rental Housing (PRH) flats, and which are at the receiving end of skyrocketing rents.

Despite the fact that Chan’s proposal might be a short-term solution to our current home affordability crisis, there are also concerns that the idea of “government-funded” subdivided flats could turn out to be a double-edged sword: while it might slightly ease our housing shortage in the short run, it could backfire and further drive up property prices and rents in the long run.

Besides, even if the government is able to churn out hundreds of these legal subdivided flats every year, they would only at best be a drop in the bucket in face of enormous demand among low-income families for affordable homes.

In fact, we agree that such concerns might not be totally unfounded. Chan has changed his mind and said these government-funded subdivided flats would be rented out to those in need at market prices rather than cost price as he had initially proposed.

Given the potential downside of turning residential units into subdivided flats, is there any silver bullet to the problem of acute housing shortage and soaring rents?

In fact, we believe there is actually one, which is the vast pool of vacant industrial buildings. We are confident that our ongoing home affordability crisis could be substantially reduced if the government could tap into these huge resources and turn these premises into legal subdivided flats.

As a matter of fact, subdivided flats in industrial buildings have been existing for quite a while already, and their numbers are continuing to grow.

However, both owners and tenants of these subdivided flats in industrial buildings are running the risk of facing criminal prosecution as the government has already declared these flats illegal because they violate the terms of the land lease and fire safety regulations.

The government might sound justified in outlawing subdivided flats in industrial buildings out of safety concerns.

However, as the saying goes, “drastic times call for drastic measures”. The fact is, these illegal subdivided flats will certainly remain there and continue to increase, with or without the government’s approval, and they do provide cheap accommodation for the underprivileged.

Given this unchangeable and undeniable fact, isn’t it time for the administration to get a bit more flexible, ditch its rigid bureaucratic mindset and start thinking outside the box, such as considering legalizing subdivided flats in industrial buildings and helping to improve fire safety and hygiene conditions in these premises?

In fact, if Chan believes even units in rundown residential buildings can be turned into safe and affordable subdivided flats, we simply just don’t see any reason why the same principle can’t be applied to industrial buildings.

This article appeared in the Hong Kong Economic Journal on July 28

Translation by Alan Lee

[Chinese version 中文版]

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