The Housing Authority has decided to give public housing tenants a one-month rent waiver to ease the pain of a 10 per cent rent rise, but it says tenants should not take such relief measures for granted in future.
The HK$1 billion waiver will be given in September, the month the 10 per cent increase kicks in.
The chairman of the authority's subsidised housing committee, Anthony Cheung Bing-leung, said it took into consideration fears about the impact of the rise on residents' livelihoods given recent high inflation.
Together with a sweetener announced in the February budget that gave the tenants a waiver for July and August, the city's 700,000 public rental households will enjoy three months' free rent this year.
Cheung said the authority did not want to leave the public with the impression that a waiver would always accompany a rent increase.
'Any relief measures are given after thorough discussions to address residents' actual needs. We're not trying to offset the rise by adding and subtracting the numbers,' he said.
Calculated over the two years until the next rent review, it means the effective rent rise will be 5.42 per cent.
Cheung said earlier that the authority could not adjust the increase, which was the outcome of a review based on calculations using a statutory mechanism. But it could give relief measures.
The original 10 per cent increase, the maximum allowed under the law, is partly the result of the introduction of the minimum wage law last year, which raised the incomes of many low-paid workers.
The first review carried out under the current mechanism, which was set up in 2007, was done in 2010, when a 4.62 per cent rise was almost completely offset by a two-month waiver.
Critics say the review mechanism is 'unofficially dead' as both reviews have been compromised by the waivers.
But Cheung disagrees.
'We have done this only twice ... I do not rule out that there is room for improvement.'
He said a change to the mechanism would involve amending the Housing Ordinance and would take time.
Raymond So Wai-man, chairman of the authority's finance committee, said the waiver would hit plans to build more flats.
'The authority might have to slow down the pace of construction and might be unable to meet its annual target of 15,000 flats. Those who are in urgent need of the homes would have to wait longer,' So said.
In its budget for this financial year, the authority projected an operating deficit of HK$1.4 billion in its rental housing account, though it would maintain HK$665 million in reserves. Taking into account investments and other projects, it would remain in surplus. The deficit had been expected to increase to HK$3.1 billion in the 2015-16 financial year.
So said the authority would need to look at ways to increase its income and reduce expenses.
The proportion of public housing households who are on welfare and therefore do not have to pay any rent