Move to cut package on rehousing

THE Government plans to pay out less to people who own several flats in its redevelopment projects.

The move is aimed at avoiding a repeat of the Kowloon Walled City clearance in which one man received $34.6 million for 100 flats in 1993, raising the ire of the Director of Audit.

The new urban redevelopment consultation paper will be submitted put to the Executive Council for approval before July, and public consultation will take place afterwards, according to Trevor Keen, Principal Assistant Secretary for Planning, Environment and Lands.

Under the ex gratia allowance system, the compensation payments are made according to the size of the premises.

The authorities intend to refine the system to make it fairer.

The proposals suggest owners who have many flats will receive lower compensation for each property.

Sources said some landlords bought up old buildings to make the most out of their rental value before cashing on compensation handouts.

The burden of rehousing the tenants then fell on the taxpayer, while the owners made off with fat profits, said one source.

According to the new proposal, the Land Development Corporation (LDC) will take a leading role in urban redevelopment.

The LDC intends to buy 200 housing units a year from the Hong Kong Housing Authority (HKHA) and the Hong Kong Housing Society (HKHS) in order to speed up urban redevelopment.

It will rehouse residents affected by redevelopment in flats bought from the HKHA and the HKHS at about $500,000 each.

The new plan should also mean substantial savings.

Flats in old buildings house an average of four families or 20 single people and six flats are needed to resettle them.

This would cost $12 million in a redevelopment, but just $3 million in flats owned by the HKHA and HKHS.

The redevelopment districts contained in the proposals are mainly older areas including Tai Kok Tsui, Yau Ma Tei, Mongkok and Tsuen Wan.

Only permanent Hong Kong residents can be rehoused under the proposed land resumption scheme, while non-permanent residents will only be relocated to temporary housing areas.

The LDC has also asked the Government to reduce by two-thirds the land premium for their residential redevelopments.

The HKHA and HKHS pay only a third of the land premium for their projects because they are non-profit-making organisations. The LDC wants to enjoy that rate too.

'Urban renewal is one of the cheapest methods to increase the housing supply and procure more valuable assets,' said LDC chief executive Abraham Razack.

He said the LDC should play a prominent role in helping private-sector redevelopment.

'We will only encourage private developers to take part in projects but will not help them to make money,' he said.

'The LDC has its own terms and conditions to balance out the benefits of the private developers and to ensure that people are rehoused,' he said.