Public housing tenants facing 10pc rent rise

PUBLISHED : Tuesday, 22 May, 2012, 12:00am
UPDATED : Tuesday, 22 May, 2012, 12:00am


Tenants in the city's 700,000 public housing flats face a 10 per cent rent rise from September.

The increase, the maximum allowed by the law under the Housing Authority's biennial review, appears to have been caused partly by the recent increase in the city's minimum wage.

Housing advisers say they will propose relief measures, such as a one-month rent waiver, at an authority committee meeting today.

They also say the rent review mechanism, which considers only changes in income, should be revised to take inflation into account.

The rise in income in the last two years was partly a result of the minimum wage law being implemented a year ago, a source said.

The rent increase still falls short of the 16.24 per cent growth in the average monthly household income of more than 16,000 households sampled between 2009 and last year in a survey on which the rise was based.

The survey found the average monthly household income stood at HK$15,784. The law states that a rent rise should follow income growth but cannot exceed 10 per cent.

The last rise in 2010 was 4.62 per cent, but it was almost completely offset by a month's waiver.

The Housing Authority review would raise the monthly rent by between HK$25 and HK$352 depending on the size of the household.

Households living on welfare, accounting for 21 per cent of all households, have their rent paid by the government and therefore are not affected.

Residents said they were disappointed with the plan.

Iris Ho, 50, a Ho Man Tin Estate resident, said: 'Inflation in other parts of our lives is already so obvious. I don't think my family's income has risen 10 per cent.'

Democratic Party lawmaker Wong Sing-chi, a member of the authority's subsidised housing committee, said he had proposed to housing minister Eva Cheng that the authority should share half of the rise.

Another committee member, Michael Choi Ngai-min, agreed there should be relief measures because of the rise in the price of necessities.

'The result shows a defect in the mechanism in that it does not consider the impact of high inflation on the lives of tenants,' Choi said.

Overall consumer prices rose by 4.9 per cent year-on-year in March.

Fernando Cheung Chiu-hung, a social science lecturer and member of the Labour Party, said: 'The minimum wage was supposed to improve people's lives, but now its benefit will be eaten up by the rent rise as well as high inflation.'

But finance professor and authority member Raymond So Wai-man said the rise was necessary as the authority was running a deficit of HK$115 in managing each rental flat.

So opposed linking the inflation rate to the rent review formula as the inflation rate was usually higher than income growth. He said the recent leap in income growth was a one-off caused by the minimum wage.