Nearly 600,000 public housing residents are expected to get one-month free rent next year and an 11.6 per cent rent cut for two years in a HK$3.8 billion plan to relieve tenants' burden. But under the scheme, rents are likely to rise after two years. A Housing Authority source said the relief package would cost HK$1 billion for the rent waiver and the 11.6 per cent rent cut would cost HK$2.8 billion. The authority added the waiver was in response to community demands. 'There have been strong voices that we should give the tenants a rent waiver. We have to respond to these calls,' a Housing Authority source said. 'The debate on rent adjustments has dragged on for many years and tenants have been waiting for some relief. We understand their feelings and you can see this as a goodwill gesture.' Under the plan, there will be an 11.6 per cent cut in rent once the new system is in place. The new rent will be the basis for future rent adjustments. Future rents will be set by an 'income index' that traces the income changes of public housing tenants. The source conceded that after the initial two years, the new mechanism would probably lead to rent increases for most tenants. 'This is why we are seriously considering a rent waiver. We do understand the situation,' he said. The proposals will be tabled to the authority for a final decision next month. The source said it was difficult for the authority to make bigger rent cuts. 'It will cost HK$1.4 billion every year for a rent cut of 11.6 per cent and taxpayers would pay HK$1.8 billion if we pushed the cuts to 15 per cent,' he said. There will be no rent reduction before the new system is in place. 'We have no legal basis to cut rents without a mechanism. We could be sued if we cut rents without a law in place,' the source said. The source said the government was finalising amendments to the Housing Ordinance to eliminate the controversial clause that capped public housing rent. The bill would be ready for Legislative Council scrutiny early next year, to be passed before June. But the source said details of the adjustment system would not be included. 'The amendments will state that rent levels will be set under procedures established by the Housing Authority. There could also be some guiding principles on rent listed in the law,' he said. 'We cannot write everything in there. It would be absurd to put a mathematical formula into the bill.' Society for the Community Organisation spokesman Sze Lai-shan said the rent cut should be bigger. 'The rent waiver is good, but this is only a one-off offer. Tenants have been waiting for a rent cut during the whole deflation period in the past year and they deserve something bigger. 'Also, not every tenant gets a pay rise these days. Linking rent with income will widen the gap between rich and poor tenants.'