Tsang's HOS resale premium change dumped

Housing Authority says it was too complex and will stick with the discount-repayment system

PUBLISHED : Thursday, 13 September, 2012, 12:00am
UPDATED : Thursday, 13 September, 2012, 3:38am

The formula for calculating resale premiums under the Home Ownership Scheme proposed by the previous administration has been rejected as being too complicated.

The Housing Authority has also endorsed Chief Executive Leung Chun-ying's proposal in his election manifesto to allow 5,000 eligible people to buy second-hand HOS flats at a discount, starting in May.

Stanley Wong Yuen-fai, chairman of the authority's subsidised housing committee, said after a meeting yesterday that it was more appropriate to stick to the 30-year-old premium rule for HOS flats.

"Most members have indicated a preference for the old rule," Wong said. "We think it has been effective and people have a clear understanding of it.

"The proposal put forward by the last administration has not been implemented, so we don't think there will be any confusion in the market."

The premium formula devised last year for the revived HOS is the second of the measures suggested by former chief executive Donald Tsang Yam-kuen to be abandoned by Leung's administration. The first was the rent-or-buy My Home Purchase Plan, which had its key rental element dropped two weeks ago.

The 5,000 new HOS flats up for presale in 2014 will follow the old formula, under which owners, having bought their homes from the Housing Authority at a discount, have to pay back the discount - the so-called "premium" - to the authority when they sell on the open market. If, for example, the discount was 10 per cent, they will repay 10 per cent of the resale price.

Under Tsang's rule, the premium would have been fixed at the time of purchase and repaid with interest on resale. Critics said the floating interest rate would make it hard for flat owners to choose the right time to resell to avoid a loss.

Meanwhile, a lucky draw will start in January to choose the 5,000 - 4,500 families and 500 singles - who are eligible to buy second-hand HOS flats at a discount. Details of the lottery will be announced in December.

Half of the winners will be able to approach home owners to negotiate a deal in May, and the other half in January 2014.

Potential sellers will come from 379,000 subsidised flats built under three schemes operated by the authority and the Housing Society.

To prevent speculation, the buyers cannot resell their homes within two years without paying the premium. Wong said existing special stamp duty would also make it costly for speculators to profit from the scheme.

Eddie Hui Chi-man, a real estate professor at Polytechnic University, said the no-resale period for the discounted second-hand HOS flats could be made longer to ward off speculators.