A provision in the Housing Ordinance that caps public estate rents at 10 per cent of tenants' incomes has condemned the Housing Authority to operating under a deficit, the statutory body has claimed.
The limit, despite being well-intentioned, does not work, vice-chairman Tony Miller said at a full meeting of the authority yesterday.
Mr Miller, also the Director of Housing, said the constraint was in conflict with another clause in the ordinance, which requires the authority to ensure that revenue meets expenditure on estates.
His warning came as authority members rejected the legislature's call for a rent reduction for public tenants, in view of an estimated total operating deficit of $10.1 billion between now and 2006.
While the authority can still make money by selling Home Ownership Scheme flats, its management of public estates has always run at a loss. 'On the one hand, we face a structural deficit; on the other hand, the legislature has made the task of dealing with it more difficult than it need be,' Mr Miller said.
According to the authority's corporate plan for 2002-03, it forecast an operating deficit of $2.3 billion in rental housing. But the ordinance prevents the authority from raising rents if the average rental takes up more than 10 per cent of the tenants' monthly income.
