Jake's View

Now we’re sowing the seeds of a good idea: make public housing occupants owners, not tenants

PUBLISHED : Tuesday, 31 October, 2017, 7:01am
UPDATED : Tuesday, 31 October, 2017, 12:25pm

Secretary for Housing Frank Chan Fan maintained that the goal to build 280,000 public rental housing and subsidised flats for sale by 2027 had not changed even though there might be a change in the ratio of rental units and those for sale. -- SCMP, October 29

I think he has the right idea. The way to house more people in public housing is to sell them that housing, not rent it to them.

Let’s start here with a little known statistic; little known because it is rather embarrassing to the Housing Authority. Although the stock of public rental housing has grown by about 150,000 units since 1990, there are about 600,000 fewer people living in them than in 1990.

That’s right, the number of public rental flats has gone way up, but the number of people living in them has gone even further down. For every step forward, we have taken four steps back.

This shows up dramatically in the figures on the average household size in public rental housing. As the chart shows, the ratio has fallen from 4.4 persons per household in 1990 to only 2.8 persons at the end of 2016, a much bigger drop than in private housing.

Why has it happened? For the best stab at answering this question, go to Professor Richard Wong Yue-chim at Hong Kong University. He has talked and written about it more than anyone else I know, and has uniquely highlighted how public housing has made spouse abandonment convenient for socially irresponsible people.

Read: Curbing speculators, and regulation are no guarantees of property market success

Most of the reasons come down to the cause of artificially low rents. These, however, have not actually done much for public housing tenants. Their employers have correspondingly adjusted wages down. As the boss reasons it, if the government pays my workers their cost of living, why should I?

It is called the law of unintended consequences, and it adversely affects all such large scale social programmes.

The solution is obvious enough. Sell these units to their tenants. In fact, make them a gift with a price of HK$1 per unit. The rest of us lose nothing. The rents barely cover the cost of maintenance and administration anyway.

But the former tenants will certainly value their homes more, when they afterwards see prices quoted inasmuch as seven figures on the local estate bulletin board. They will then also see what personal financial sense it makes for families to live together longer. The household size ratio will no longer plummet.

So, as I say, I think our Secretary for Housing has the right idea. Unfortunately, I also think his boss, the Chief Executive Carrie Lam Cheng Yuet-ngor, in her first speech from the throne, has set him on the wrong path with a plan of giving tenants priority in the new public housing offered for sale.

The pitfall of this approach was revealed in an account we published last week of an 80-year-old woman who did not like the public sale estate into which she had moved, but was prepared to put up with it at the behest of her offspring, who paid for her flat there but are themselves living in public rental housing.

If they can afford a mortgage on a flat in which they do not live, are they not perhaps too well off for public housing?

No matter, they will soon inherit their mother’s new home and then let’s see whether the Housing Authority ever dare push them out into private housing market, where they probably belong. This new twist in public housing is certain to be scammed.

Just do it the simple way, Mr Chan. Give those rental units to their tenants, tell them to move out if they don’t want the gift, and then watch magic happen. Our housing shortage will quickly disappear.