Public housing tenants will be asked to help relieve the Housing Authority's financial burden with a rent increase of almost 10 per cent, if an authority committee approves the plan tomorrow.
A government source says the authority's deficit for this financial year will be slashed from HK$1.7 billion to HK$900 million if the plan is endorsed by independent members of the subsidised housing committee.
But the deficit will rise to HK$2.1 billion if members vote to waive one month's rent to ease the burden on tenants, as they did for the previous two rent increases.
"We hope the committee will think twice about [a waiver]. Is this the best way of using the authority's resources?" the source said yesterday.
Authority officials review rents every two years and must link rises to the income levels of tenant households, with a maximum rise of 10 per cent.
The department found that average incomes among a sample of 24,000 households rose by 19 per cent over the two years since the 2012 review, which saw rents rise by 10 per cent.
If the increase is approved, it would cost tenants between HK$28 and HK$387 per month depending on the size and location of the flat, with an average increase of HK$154. It will take effect in September.
The authority is facing a growing financial burden as the government pushes it to build 200,000 public rental flats in the next decade, a problem made worse by rocketing construction costs.
The cost of building a public flat has jumped from HK$700,000 to HK$1 million, housing minister Professor Anthony Cheung Bing-leung said last month. He warned that the authority's policy of paying for new rental flats by selling subsidised homes no longer worked.
The authority has predicted that its reserves of HK$68.1 billion would fall to HK$28.3 billion within four years. An authority working group warned that it could run up a deficit of up to HK$490 billion in the 22 years starting in 2019.
Committee chairman Stanley Wong Yuen-fai saw no justification for waiving rent at a time when incomes outstripped rent rises, but Legislative Council housing panel chairman Wong Kwok-hing said the rise would hit the government's popularity as transport fares also rose.