20 July 2019
Founded in 1948, the Hong Kong Housing Society has been working closely with the government in developing subsidized homes over the years. Photo: HKEJ
Founded in 1948, the Hong Kong Housing Society has been working closely with the government in developing subsidized homes over the years. Photo: HKEJ

Time to review the role of Hong Kong Housing Society

Among the six policy initiatives on housing that Chief Executive Carrie Lam Cheng Yuet-ngor unveiled recently is her decision to lower the selling prices of Home Ownership Scheme (HOS) flats to 52 percent of the current market rate from 70 percent previously.

Shortly after the decision was announced, Marco Wu Moon-hoi, chairman of the Hong Kong Housing Society (HKHS), publicly raised concerns about the plan.

He said that once HOS flats are priced at only 52 percent of the current market rate, the HKHS won’t be able to cover the construction costs plus the land premiums paid to the government, and may lose HK$500,000 to HK$1 million for each unit sold, a scenario that could seriously undermine the financial soundness of the organization in the long run.

Sources told local media that the new HOS flats to be sold at 52 percent of the market rate will be priced between HK$1.18 million and HK$4.68 million.

Wu’s concerns, in the meantime, also highlight the awkward role his group is playing.

Founded in 1948 as a non-governmental organization (NGO) charged with providing affordable homes for poor families in Hong Kong, the HKHS has been working closely with the government in developing subsidized homes over the years.

However, that the HKHS is an NGO entirely independent of the government has not only given rise to administering issues, but has also prevented the administration from directly injecting public money into the organization in order to boost its size.

To address the problem, the former British colonial administration set up the Housing Authority (HA) chaired by the Secretary of Housing in 1973 as an official body responsible for developing subsidized housing.

With the HA now at center stage in relation to subsidized housing, the HKHS thus has been consigned to a secondary role.

Ever since the government launched subsidized homeownership initiatives in the early 1970s, the HKHS and the HA have once reached a tacit agreement, under which the former would specialize in building HOS flats as well as homes under the “Sandwich Class Housing Scheme” (SCHS), while the latter would focus on developing Public Rental Housing (PRH) flats.

Yet in 2002, the government called a sudden halt to selling and building of both HOS and SCHS units amid the property market crash.

As a result, while the HA continued to build PRH flats, the HKHS was simply left standing idle.

At one point, the government was seriously thinking about dissolving the HKHS, only to eventually shelve the plan out of concerns about potential opposition from the Legislative Council.

Nevertheless, as the current administration under Lam is firing on all cylinders expediting the HOS, the Green Form Subsidized Home Ownership Scheme, as well as the new housing scheme available to local first-time homebuyers, the role of the HKHS has remained awkward and unclear.

Furthermore, the overlapping roles of the HKHS and the HA persist as the two bodies continue to develop PRH, HOS and other subsidized homes. Such overlapping roles are working against the effective allocation of public resources.

Given the fact that dissolving the HKHS is not a feasible option at this point, it is perhaps time for the government to drastically review the role of the HKHS.

In particular, the administration should clearly redefine the roles and functions of both the HKHS and HA.

That the HKHS is not an official body could indeed be an advantage rather than a weakness.

Since the 1980s, the HKHS has been fulfilling the role as a de facto “testing laboratory” for the government that specializes in experimental and non-mainstream housing projects, such as the Verbena Heights, Hong Kong’s first environment-friendly housing estate; the Jolly Place, the city’s first serviced apartment tailor-made for the elderly; and most recently, the Transitional Housing Scheme at Yu Kwong Chuen in Aberdeen.

Over the years the HKHS has proven quite successful in exploring new and innovative ideas for public housing development in Hong Kong, thanks to its flexibility as an NGO.

That said, we believe the government should continue to foster the HKHS’s leading role in experimental housing programs, while letting the HA focus on building HOS and PRH flats, so as to optimize the use of public resources on housing development.

This article appeared in the Hong Kong Economic Journal on July 10

Translation by Alan Lee with additional reporting

[Chinese version 中文版]

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