THE $2 billion earmarked this year for the sandwich class housing scheme is expected to be operated as a low-interest loan fund. The Secretary for Planning, Environment and Lands, Mr Tony Eason, said yesterday the low-interest loan option had been chosen after careful consideration of many views expressed on the scheme. Other options included the grant of direct cash subsidies and some fiscal measures such as exemption from stamp duty. ''The low-interest loan option is more cost-effective and fair because it would enable a rolling fund to be set up to benefit more people by recouping the subsidy from successful applicants,'' Mr Eason told a joint meeting of Legislative Council's housing, and lands and works panels. A total of 4,000 people would benefit from the scheme in the first three years, with applicants eligible for immediate relief on down payments of flats. They would receive a loan of about 20 to 25 per cent of the property's price but the amount would not exceed $500,000. The ceiling for property value would be set at $3 million and applicants would have to repay loans only three years after applications were approved. Mr Eason said the repayments would allow another 2,500 people to benefit in the subsequent 10 years. The proposal was welcomed by many legislators, although they disagreed on some of the application criteria. Along with local housing groups, some members were worried that the scheme could spark property speculation unless there were proper resale restrictions. Under the proposal, a family with a household income of between $20,001 and $40,000 would fall under the category of the sandwich class. Those eligible for application should be aged between 30 and 45. Mr Eason expected the impact of the scheme on the private market would be small since just 1,000 eligible applicants would be selected in the first phase after which a review would be carried out. And he assured members there were conditions restricting the resale of the property that should bar speculators from exploiting the scheme. Legislators were also unhappy at rules that meant applicants must not have had any domestic property registered in their names in Hongkong within two years prior to their application.