Easing of double stamp duty another example of Leung's failed housing policy

Albert Cheng says the only certainty in the chief executive's flip-flopping housing measures is that they have all been ill-thought-out or ineffective

PUBLISHED : Friday, 16 May, 2014, 3:03am
UPDATED : Friday, 16 May, 2014, 3:03am

Secretary for Financial Services and the Treasury Professor Chan Ka-keung told legislators on Tuesday that part of the measures to cool the property market would be relaxed, to make it easier for residents to upgrade their flats.

Thus, residents moving up the property ladder will no longer have to pay a double stamp duty of as much as 8.5 per cent, if their old unit is sold within six months of signing a formal agreement to buy the new one, rather than a provisional agreement.

This means the grace period will be lengthened by one to two months. It could be extended to as long as three years if second-home buyers purchase flats which are under construction. Developers are allowed to sell projects as early as 30 months before completion.

Those who want to get a better home should welcome the change, which is still being debated by the bills committee.

Yet the latest relaxation has been interpreted more as a move to help developers sell their new flats. The market for new homes has become rather sluggish since the doubling of stamp duty. The latest change offers developers a chance to clear their reserves of newly completed flats.

The announcement came on the heels of Chief Executive Leung Chun-ying's assurance to the Legislative Council that he had no intention of appeasing developers by making the buying and selling restrictions less "spicy".

The relaxation of the double stamp duty is yet more proof of how misleading the chief executive can be. He has written and spoken a lot about land supply and housing policies over the years. But anyone who took his words seriously would have made multiple mistakes in their housing plans.

Before he announced he would run for the office of chief executive, Leung started a column in Ming Pao to build up his image. He churned out thousands of words against former chief executive Donald Tsang Yam-kuen's housing policies. In doing so, Leung painted himself as a people's hero against the collusion between property developers and the government.

As the then convenor of the Executive Council, Leung violated the principle of collective responsibility with his criticism.

Since he took the helm almost two years ago, Leung has halted or reversed his predecessor's housing initiatives. He has, for example, shelved the policy to revitalise industrial buildings, raising the suspicion that he does not want to impinge upon developers' interests.

Many of the initiatives in his own housing blueprint have turned out to be unworkable. A case in point is his "Hong Kong property for Hong Kong residents" policy, which has been quietly dropped.

What he has managed to implement is a plan to allow 5,000 households living in private housing to buy government-subsidised Home Ownership Scheme (HOS) flats in the secondary market without paying any premiums. The demand is so big that prices for the HOS flats have soared. Private flats in the lower- and middle-income bracket have also gone up as a result. The side effects of this policy were obviously underestimated.

This has contributed to an awkward situation in which, despite the government's "spicy" measures, there has been little adjustment in property prices.

Leung has put the blame squarely on inadequate land supply. He is so desperate that he is eyeing potential sites in country parks and on Lantau Island. Yet such lots are largely earmarked for the development of luxury flats, which are beyond the reach of the vast majority of Hongkongers.

Hong Kong's housing problem has been defined in terms of home ownership. This is wrong. The real issue is provision of housing. The government is not obliged to increase land supply for private development. It is not even necessary for officials to toil over the building of HOS flats, which will also be unaffordable for most people.

Hong Kong ought to learn from New York, which has focused on supplying small flats to meet demand. The government should have produced a lot more public rental flats of about 200 square feet each. Such flats should be offered to the common people at about 20 to 25 per cent of their household incomes, so that most citizens, especially the young, can have a place for themselves.

Another solution is to develop shopping centres for parallel products near the border, so that mainlanders do not have to travel in droves to other parts of the city. This could ease demand on facilities in the urban areas, freeing up space for other planning purposes.

"Cheat me once, shame on you. Cheat me twice, shame on me," as the saying goes. Those who have pinned their hopes on Leung to solve the housing problem only have themselves to blame.

Albert Cheng King-hon is a political commentator. [email protected]