Legislators lash U-turn on home purchase proposal

PUBLISHED : Saturday, 21 August, 1993, 12:00am
UPDATED : Saturday, 21 August, 1993, 12:00am

NEWS that owners of overseas property will be eligible for cash help under the controversial ''sandwich class'' home purchase scheme prompted outrage among legislators last night.

Designed to help middle-income families afford their own homes, the first phase of the $2-billion scheme comes into operation on Monday.

Originally, the Government had said that families owning property in the two years prior to an application would be disqualified. But yesterday it revealed that the restriction only applied to local property.

Officials from the Hong Kong Housing Society, appointed by the Government to approve grant payments, said it was impossible to check if applicants already owned property overseas and therefore the scheme was open to abuse.

''It would give rise to enormous administrative difficulties,'' director of estate management Wong Lai-chun said.

To be an eligible ''sandwich class'' family, applicants must have at least three members and a total monthly income of between $20,001 and $40,000.

The applicant, the main breadwinner of the family, must also have lived in Hong Kong for seven years.

Successful families will be lent up to $500,000 each, or 20 per cent of the price of their flat, at a subsidised interest rate of two per cent per annum.

Legislators attacked the apparent U-turn as irresponsible, saying it could see taxpayers' money used to fund property speculation.

Grassroots groups also criticised the scheme for helping rich people at the expense of the lower income families and warned of social conflict.

United Democrat legislator Li Wing-tat said: ''I doubt if the Government still remembers that the rationale behind the scheme is to help those really in need of housing.

''Those owning flats overseas should be rich enough to buy homes here if they sell those flats. There is no reason to give them $500,000 to buy flats in Hong Kong.'' His colleague, Albert Chan Wai-yip, said: ''It is a terrible U-turn. Many people use their money to speculate on overseas properties while renting a flat in Hong Kong.

''The move is nothing but using taxpayers' money to support speculation.'' The People's Council on Public Housing Policy spokesman, Virginia Ip Chiu-ping, warned that the move could create social conflicts.

''The Government is thinking of ways to evict those public tenants owning properties. I want to hear how it is going to justify lending money to overseas flat owners to buy flats here.

''It is robbing the poor to subsidise the rich.'' The Housing Society denied the claims and argued it was impossible to approach all countries to check an applicant's property ownership.

Ms Wong said the society might look into the issue in a review next March after the implementation of the first phase and a report would be submitted to the Government.

Liberal Party legislator and architect Edward Ho Sing-tin appreciated the administrative difficulties but said they should not be an excuse. He suggested an applicant should be required to make a declaration on property ownership.

Applications under the first phase will close on September 3. A computer ballot will be held on September 15 to shortlist 2,000 eligible applicants for interviews when they will be required to submit tax bills or other income proofs for inspection.

The first 1,000 successful applicants will be issued eligibility certificates and given six months to choose a flat not older than 10 years and priced under $3 million. The society expected the first batch of applicants could get the money as early as late October.