Cooperative plan shows the way ahead for Hong Kong housing

Albert Cheng says housing built for civil servants under a colonial-era scheme is ripe for redevelopment – if only government officials would stop standing in the way with their restrictions

PUBLISHED : Friday, 08 April, 2016, 10:35am
UPDATED : Friday, 08 April, 2016, 10:35am

Forming cooperatives to develop residential projects is a little-known but proven way in Hong Kong to meet the housing needs of genuine end-users. As early as 1952, a scheme was launched as a form of housing benefit for civil servants. Land was made available at a concessionary premium for them, and eligible civil servants had to register as cooperative societies to hold the premises and the legal titles of the land collectively.

A total of 238 groups were formed under the Civil Servants Cooperative Building Society Scheme (CBS) to manage and maintain these mostly four or five-storey buildings occupying a combined area of some 30 hectares. The last were erected in the mid-1980s.

The buildings are now old and their sites are under-utilised by today’s standard. The government has identified 85 of these sites for redevelopment but the plan for redevelopment to benefit a much larger pool of users has run into a snag.

Hong Kong cooperative homeowners up in arms over terms set by government for redevelopment

The government, in collaboration with the Housing Society, came up with a pilot scheme last May with several stringent prerequisites, such as every title-holder of such an estate will have to agree on the plan, the redevelopment site must be bigger than 10,000 square feet, and the Housing Society is not supposed to participate at a loss.

Bureaucratic intransigence has resulted in a lose-lose standstill for all

The CBS homeowners will then have to pay the Lands Department the differences in land premiums. Undersecretary for Development Eric Ma Siu-cheung has made it clear that the government would neither relax the plot ratios nor accord priority for the CBS flats.

Many of the CBS owners are now old and in poor health. It is unrealistic to get everyone on board. The government’s aggressive outstanding land premium requirements will also mean that the owners would not be able to afford a comparable flat. So far, there are only 11 cases of successful redevelopment.

The bureaucratic intransigence has resulted in a lose-lose standstill for all. There are many ways to overcome the problems. The Urban Renewal Authority, for example, can be engaged to acquire the CBS sites in its usual manner at, say, 70 per cent of market prices while providing the owners a flat in the redeveloped estate.

Government to produce 97,100 public housing units in Hong Kong over next five years, says chief executive

In his policy address this year, Chief Executive Leung Chun-ying said the government has earmarked 80 hectares of land at Tseung Kwan O Area 137 for development, studying the feasibility of using the site for residential and commercial use.

Professor Edward Yiu Chung-yim, associate director of the Institute of Future Cities of the Chinese University of Hong Kong, has suggested that the CBS model be adapted for the area. He recommended that 24 hectares from Area 137 be leased to non-government organisations at a nominal fee of HK$1. These NGOs can form their own version of co-operative building societies to develop residential units on the site. Citizens can become members of the CBS to share the construction and maintenance costs.

Yiu proposed that these society members be entitled to live in the premises but do not own the titles. The flats are meant to be non-transferable so that fluctuations in property prices are irrelevant to the residents. When they want to move out, they will have to quit the society and return the property at a depreciated price.

He estimated that the construction cost of a 500 square feet unit would add up to HK$1 million. That means those who can afford a monthly instalment of HK$6,000 will be able to move into such a flat. The site can provide 19,000 units, enough to accommodate 50,000 residents. This arrangement can meet public housing demands and ease the Housing Authority’s chronic problem of inadequate capital funds.

Finally, Hong Kong’s housing policy is being built on solid foundations

The chief executive has grumbled about public objection to public housing development plans. When the CBS owners have virtually come begging to have sites redeveloped, the administration drags its feet. And when an academic has come up with a practical idea to rid public housing projects of its speculative aspects, officials simply remain non-responsive.

Leung has only himself to blame, the next time he is criticised for failing to improve public housing.

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