Fixing Hong Kong's housing crisis

April 27, 2021 09:27
Photo: Reuters

Hong Kong has a housing crisis.

In 2016, an estimated 2.8% of the city’s population was living in subdivided apartments – housing in squalid, dilapidated conditions that featured egregiously expensive rents and living conditions that are frankly, fire and safety hazards. The average queueing time for public housing, according to the latest numbers from the Hong Kong government, was 5.7 years – that is, impoverished individuals must spend at least 6.7%, on average, of their lifetime (taking 84.93 to be the average life expectancy) awaiting a minimally adequate apartment from the government.

Some in the Establishment have attributed the social unrest and political upheaval to the administration’s failure to tackle the housing crisis head-on. Let us, for now, set aside the empirical questions of whether this causal explanation holds water – e.g. might there not be, too, concerns with the quality of the city’s governance and administrators, or, indeed, a general sense of unease at the means through which the city was being assimilated into its own country? The imperative question then becomes, of course, what gives – how can we solve the problem?

A group that is oft-castigated is the city’s land developers. Indeed, there exist few reasons, at first glance, to actively like them. The official narrative is that tycoons and wealthy doyens have been complicit in sponsoring pro-business, pro-market policies when it comes to the housing market – thereby rendering futile previously touted initiatives aimed at curbing apartment prices, such as the vacancy tax on housing, or measures designed to prevent speculative housing purchases. All of this is fair and square: after all, some developers could indeed be reasonably accused of complicity in propping up a property regulatory regime that favours a bizarre mixture of excessive rigidity (when it comes to land sales, or, indeed the Treasury’s chief revenue strategy) and under-regulation (when it comes to the dearth of rent controls, or regulations concerning the safety and conditions of housing provided).

Yet I would suggest the real problem lies… elsewhere. It lies with the New Territories Small House Policy, introduced in 1972 in Hong Kong, which effectively introduced a fiat permission that entitled any and all indigenous male villagers in the New Territories (above the age of 18) to generous grants enabling him to build one house in the region. In seeking to mollify the opposition from New Territories residents, the colonial government savvily conducted an ‘overdraft’ of Hong Kong’s future land supply, by essentially guaranteeing – to indigenous residents – unmovable and publicly unusable land-plots.

Hong Kong’s total land area is 1105.7 km2. In 2015, only 77 km2 in the city was relegated to residential use – this comprises 7.0% of our city’s total landmass. Fine, there could well be countryside parks, environmental conservatories, and miscellaneous reasons for which some of the remaining 1000+ km2 of land cannot be used. Yet, as the largest region, by far, in Hong Kong, New Territories remains the best and most efficient source of land – especially when compared against scattered brownfield and vacated industrial buildings that are, whilst certainly deployable, inadequate for the purpose of resolving our land and housing crises.

There are few better ways of generating substantial land supply, lowering housing prices, and creating more apartments (public or subsidised, or otherwise), than for the government to put an end to the monopoly of land in the hands of a select few. The current administration, to give credit where credit’s due, sought to introduce the Lands Resumption Ordinance, as a means of resuming land from land owners for any “public purpose”. The discretionary rights, in other words, rest with the Chief Executive.

Yet this is by no means enough – for the simple fact that precisely because the Chief Executive must cater to the interests of individuals who retain a powerful and resilient grip over land and financial interests in the New Territories, and who wield sizeable influence over the Chief Executive election committee, it is unlikely that whoever governs Hong Kong could act with fortitude and resolve to crack down upon the existing stalemate. Resumption of land is theoretically tenable, yet practically infeasible, unless drastic reforms are introduced to the obsolete Small House Policy.

Tackling this issue also conforms with the zeitgeist of curtailing the excesses of land developers. Note that many land developers often resort to illicit or tacit sales agreements with indigenous villagers – what is colloquially referred to as “To Deng” (套丁) – as a means of acquiring and hoarding land in the New Territories. Hence a critical enabler of developers’ holding onto land constitutes the anachronistic policy that allows individuals to stake out a plot of land as their own (through no effort or work on their part), only to profit off reselling it to the rich and the powerful.

So what solutions are there? The abolitionist would call for the instantaneous dissolving of the policy – yet this is neither politically sensible nor morally justified. After all, New Territories villagers are Hongkongers whose rights to security and pursuing their own life plans are indeed codified (albeit not on paper) by our city’s rule of law. Furthermore, to think that a reckless wave of property seizure and expropriation would not put off large swathes of capital and investment flowing into the city – would be downright delusional.

The solution lies instead with identifying positive alternatives and incentives for New Territories residents to give up their rights to land, perhaps coupled with a crackdown upon the agreements between certain developers and villagers over the rights to use the lands. One possible means through which this occurs, is via prohibiting sales of the land to outsiders or non-villagers – a solution that has been raised many times, though vetoed as a result of political unpalatability.

Now that our electoral system has been ‘improved’, and given the (correct) identification of the housing crisis as amongst the most pressing problems this city is confronted by, it is high time for the administration to do something – something beyond the ordinary, beyond the (old) normal, to put an end to the suffering that afflicts thousands in our city.

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Assistant Professor, HKU