After profuse but failed attempts to shore up the property market over the past year, officials are going back to the drawing board for more drastic reforms. An overhaul of the measures is expected to be outlined in Tung Chee-hwa's second policy address on October 7. The nine-month moratorium on selling government land, ordered by Mr Tung in June, is expected to be extended. Mr Tung is understood to prefer a 'regular review' to meet market needs. Another target is the 70 per cent cap for property mortgages. While the banking sector has expressed reservations, developers have lobbied for long for a relaxation, with some suggesting a ceiling of up to 90 per cent. The legislature earlier this month passed a motion in support of easing the cap. Mr Tung is not expected to commit to more major housing targets this year. His high-profile pledge in July last year of an annual supply of 85,000 flats will remain as a 'long-term commitment'. The supply-boosting pledge has been blamed for this year's market slump and Mr Tung has been under mounting pressure to 'downsize' it. He is also expected to 'fine tune' his ambitious target for 70 per cent of families to own their flats by 2007, because of the economic downturn. While Mr Tung reassures developers that the target will be interpreted 'flexibly', administration officials who privately warned him that setting such a high standard would cause problems are left to pick up the pieces. Both the Secretary for Housing Dominic Wong Shing-wah and Secretary for Planning Environment and Lands Bowen Leung Po-wing went through several rough months immediately after the handover, when they were bold enough to tell Mr Tung that some aspects of his policy were simply not practicable. Now they have been proved right. Sources, however, said it would continue to be a 'guiding principle' to save face for Mr Tung even though officials have privately admitted the target has now become more of a joke. Mr Tung's policy to sell public flats to tenants ended the British Hong Kong Government's long-running policy of ensuring 'reasonable allocation of public resources to help those most in need'. Housing officials often found themselves lost for words when asked why those living in subsidised housing were given more assistance to buy flats, while cage dwellers were forced to satisfy income and asset screenings to get a public unit. In 1997-98, the Housing Authority was subsidising each public tenant to the tune of some $230 a month. This excludes the historical value of land granted to the authority for rental housing. The Housing Authority is running at an increasing deficit in managing the 660,000 families on its rental estates. The deficit is forecast to grow to around $6 billion for a five-year period ending in March 2001. A 1995 government document on 'Safeguarding Rational Allocation of Public Housing Resources' by the authority stated that 'public housing is a public asset and allocation of public housing subsidy should be in relation to practical needs.' But amid tremendous pressure from Mr Tung, the authority chairman Rosanna Wong Yick-ming pushed through the Tenant Purchase Scheme last January, putting on offer this year 26,800 rental units for tenants on six estates. The units, up to 13 years old, were sold for as little as 12 per cent of their market price, or up to about $250,000 each. In July, the authority came up with a revised Home Purchase Loan Scheme to allow tenants an interest-free loan of $800,000 to pay off their mortgage or buy new flats in the private market. Authority officials jolted critics by declaring the revisions were meant to 'help the needy on the waiting list'. The revisions apply exclusively to public tenants, regardless of whether they already own properties elsewhere. The scheme, introduced 10 years ago, was originally aimed to help lower-income tenants to buy a property in the private market. The Housing Bureau last month reversed the policy of avoiding 'double benefits' and allowed public tenants to buy sandwich-class flats. The sandwich-class housing scheme, introduced by former Governor Chris Patten, was designed to help middle-income families renting private homes to buy their own flats. For the non-public housing residents, Mr Tung introduced the Home Starter Loan Scheme for families with monthly incomes of up to $70,000 to buy their first flats. The loan scheme is on top of the sandwich-class housing loan scheme administered by the Housing Society and the Home Purchase Loan Scheme by the Housing Authority. As outspoken property consultant Shih Wing-ching once said: 'As an agent, I am happy that the Government can give us so many business opportunities. But personally, I cannot understand why a family with a $70,000 income should deserve taxpayers' help to buy flats.' A policy U-turn last month extended the Home Starter Loan Scheme to cover public tenants, allowing them to benefit from at least four government housing subsidy schemes. For example, a six-member family living in a government rental flat for sale, pays $2,000 a month for rent - a discount of about 70 per cent on current market rents. Under the revised loan scheme, two of the family's members or so-called non-principal tenants, say, the two sons, could combine to apply for the $600,000 loan under the Home Starter Loan Scheme, as could the two daughters. The householder remains entitled to three housing schemes offered by the authority: the Home Ownership Scheme, the Home Purchase Loan Scheme, and the Tenant Purchase Scheme. And there is no limit on the number of loans granted to the same family. The number and variety of loans and schemes have confused applicants as well as the housing officials, who are considering a 'restructuring'. Mr Tung's generous policies are perhaps his way of compensating for his 'unfortunate' remarks early last year when he urged families not to enter the then overheated market, shortly before prices soared to new highs. A chastened Mr Tung later admitted it was one of his biggest mistakes. There may also be genuine self-interest. Hong Kong's economy is property-related and government revenues are property-dependent. Land sales and other property-related items brought in more than $80 billion in the last fiscal year, about 30 per cent of total revenues, or 40 per cent of expenditure. Some observers also believe there are political reasons. Leading tycoons such as Li Ka-shing of Cheung Kong and Lee Shau-kee of Henderson Land Development were among the staunchest supporters of Beijing's takeover of Hong Kong. Both, as well as Mr Tung, sat on the Beijing-appointed Preparatory Committee which dictated the transition of Hong Kong to Chinese rule and on the Selection Committee which made Mr Tung the first chief executive. In a bid to shore up the market during amid the Asian currency crisis, the secretary for planning, environment and lands announced last March a 'flexible' approach to sell government land. Land auctions would be held once every two months, instead of monthly. Mr Leung also said the sales of residential land would be delayed until prices improved, and that the Government would place a greater proportion for sale by tender during the market slump. The decision to bail out the property sector has cast doubts over the administration's reputation for competent management. Influential housing affairs observer and Society for Community Organisations director Ho Hei-wah said: 'It seems the Government is willing to do whatever it can to help the developers. 'Definitely the property developers were pushing the Government to adopt these policies. Mr Tung is kowtowing to developers' wishes.' Intentional or not, the impression given is that the big developers set housing policy for the Government. And it is effecting public confidence in Mr Tung's housing policies.