Hong Kong budget loan plan to help buyers escape housing trap
Subsidised flats still require final payment based on market price, stopping owners moving on
Older people who have bought a subsidised flat but have not yet finished paying for it are to be offered loans to buy their homes outright in a bid to boost the housing supply, under a proposal announced by Financial Secretary John Tsang Chun-wah in yesterday's budget speech.
The loan and probably the interest on it too would not have to be paid until the flat is sold or the owner dies, said the government-owned Hong Kong Mortgage Corporation, which is set to provide the loans.
Subsidised flats are sold under three schemes: the Home Ownership Scheme; the Sandwich Class Housing Scheme and the Tenant Purchase Scheme. They all stipulate that owners must pay off any premium - the subsidy for the flat converted into the current market value - to the Housing Authority or the Housing Society before they can sell or let their properties.
"After settling the premium payment, owners will have greater flexibility in disposing of their flats, such as letting out or selling the flats on the open market," Tsang said.
He added that he "will not hesitate to introduce measures when necessary" to stabilise the market. It follows a surge in home prices over the past 10 months.
The Premium Loan Guarantee Scheme proposal is similar to the corporation's existing Reverse Mortgage Programme for homeowners aged 55 or above - which has only had 768 applicants since its launch in 2011.
The new scheme would calculate interest at the prime rate minus 2.75 per cent. There is likely to be an annual insurance charge of 1.25 per cent of the loan plus a one-off insurance fee at 2 per cent of the property value, but a plan to charge a fixed interest rate is being considered.