Judges face legacy of families' cash help onto property ladder

Judges to rule on claims triggered by common practice of families contributing to help relatives buy into subsidised flats scheme

PUBLISHED : Tuesday, 23 October, 2012, 12:00am
UPDATED : Tuesday, 23 October, 2012, 3:15am

Two families took their disputes over Home Ownership Scheme flats to the Court of Final Appeal yesterday, in cases that could have far-reaching consequences for family members who pool their money to help relatives buy these subsidised properties.

The court heard the cases together as they raised similar legal questions regarding the transfer of property ownership.

Both highlight what housing policy observers say is common practice: family members pooling their money to get an HOS flat in exchange for an interest in the property, even though not all contributors may be registered owners or residents of the flat.

In one case, a couple became the registered owners of an HOS flat in 2000 after it was paid for by their son, who has since died, and his wife, Cheuk Shu-yin.

In the other case, a now-deceased woman is said to have contributed to the purchase of a flat which is owned in the name of her son and his wife. However, a second son's wife, Lam Wa, claims the contribution was also intended to benefit her husband and the rest of the family.

Cheuk is asking for the court to recognise her ownership of the flat, while Wa's claim seeks similar recognition for the estate of her mother-in-law.

The government developed the HOS scheme in the 1970s to provide housing for low-income residents. Applicants for HOS flats must meet certain income requirements. The flats are sold well below market rate.

Owners must wait a certain period and pay a premium before they can sell the flats on the secondary market. They must get the approval of the director of housing before refinancing the flats.

Owners who mortgage, transfer ownership or conduct other transactions with HOS flats illegally are liable to a fine of up to HK$500,000 and up to one year's imprisonment.

The Court of Appeal had earlier ruled that neither claim could count, as the arrangements would have been unlawful.

Anderson Chow SC, Cheuk's barrister, said arrangements like his client's were not uncommon and that there was no actual transferring of any ownership in this case.

However, Lisa Wong SC, barrister for Garmen Chu, Lam's sister-in-law, said the legislation was created to cover situations like those in the two cases.

She warned of the implications of recognising such arrangements. "If this approach is adopted, it would lead to an abuse of the scheme," she said.

Yip Ngai-ming, an associate professor at City University's department of public and social administration, told the Post there were many cases of family members pooling their money to buy HOS flats, but it was often difficult to state exactly how much each relative contributed.

If the court recognised such arrangements as valid, it would have a big impact, he said.

The court reserved its ruling.