Bill on subsidised rents passes

The 600,000 families living in subsidised flats will enjoy an 11. 6 per cent rent cut next month after the Legislative Council passed the controversial Housing (Amendment) Bill 2007 yesterday, which aimed at introducing a new rent adjustment mechanism.

But it also meant they will no longer enjoy Housing Ordinance protection that ensures rents will not exceed 10 per cent of their median income.

Secretary for Housing, Planning and Lands Michael Suen Ming-yeung said the new mechanism was 'the fairest and most reasonable'.

The adoption of the amendments put an end to a 10-year tug-of-war between the government and housing pressure groups which began on the eve of handover. Democratic Alliance for the Betterment and Progress of Hong Kong legislator Chan Kam-lam had proposed the median rent-to-income ratio of 10 per cent when legislators debated a law to insulate tenants from sharp rent rises.

The cap led to a three-year legal battle between tenants and the authority that ended two years ago. In 2002, the authority was sued for not reducing rents during deflation. The Court of Final Appeal ruled the cap applied only when a decision was made to raise rents, and it was not a statutory definition of affordability.

After reviewing the rent adjustment mechanism, the authority decided to drop the median clause.