Rent rise formula sparks controversy
How much tenants should pay for public rental housing should be a straightforward affair after a revamp in the rent adjustment mechanism in 2008. The Housing Authority has adopted a method that allows both rent increases and cuts according to changes in average household income. The first increase under the revised method, a moderate 4.62 per cent, was implemented two years ago without dispute. Since then, the income-based approach has been seen as a fair and acceptable way to determine rent adjustments. The second increase, however, has stirred controversy. Early this week, a subcommittee of the authority endorsed a 10 per cent rise, the maximum allowed under the law, for 700,000 households starting from September. This came after a survey found average monthly household income had increased 16.24 per cent over the past two years. The rise is partly due to the HK$28 per hour statutory minimum wage introduced last May.
The 10 per cent rent increase is no doubt a heavy burden for some tenants. Without the statutory cap, the increase would have been even steeper. Each household may pay an extra HK$25 to HK$352 a month. The increase has raised concerns about whether the mechanism should look beyond income and take into account other factors like inflation and household affordability. Public housing tenants are the lowest income earners in society, who cannot afford to pay the market rent for accommodation in the private sector. It is ironic that they benefit from a minimum wage on the one hand, but have to pay higher rent on the other.