Most old buildings ineligible for mortgage scheme

I refer to the recent announcement by the Urban Renewal Authority that 13 banks are now offering mortgages for properties which meet their scheme for rehabilitating old buildings.

While the URA is moving in the right direction by encouraging banks to lend to owners who refurbish old buildings, the current scheme has major deficiencies which make the majority of well-maintained buildings ineligible.

For instance, the only buildings which qualify on Hong Kong Island are those located within the URA target areas in Sai Ying Pun and Wan Chai. Any well-maintained old building with an owners' corporation, located elsewhere, is not even considered.

The effect is that anyone wanting to buy a flat elsewhere on Hong Kong Island with a market value of say $4 million in a 45-year-old building, cannot get a mortgage from a bank. The URA cannot help under the limitations of its scheme.

Even if it wanted to help, its scheme still includes a 50- or 55-year building age limit. If the building meets the other requirements, why must there be an age limit? The bank should lend on the basis of the security provided by the market value of the property and the ability of the borrower to service the loan.

The URA says it has insufficient resources to provide loans for buildings in other areas. But the well- organised and well-maintained properties do not require any funding. What is required is an extension of the scheme to one of certification.