Hong Kong leader must stand strong on Starter Homes scheme

As Carrie Lam pushes to accommodate sandwich class priced out of flats market, she must not be afraid to take on vested interests in the New Territories

PUBLISHED : Thursday, 05 October, 2017, 2:03am
UPDATED : Thursday, 05 October, 2017, 2:03am

Among new housing initiatives that Chief Executive Carrie Lam Cheng Yuet-ngor is expected to introduce in her maiden policy speech next week is the Starter Homes scheme.

It should be seen as a rare opportunity to address two long-standing issues plaguing New Territories development: idle farmlands held for years, if not decades, by developers and the so-called ding right of indigenous male villagers to be given a plot of land to build a small house.

Will Starter Homes scheme help young families or fatten the pockets of developers?

The new scheme aims to fill a gap left by the subsidised Home Ownership Scheme for the sandwich class and traditional public housing for low-income families. As a response to stratospheric home prices in the private market, it’s designed to help middle-class families and even singles to get on the home ownership ladder.

The first question is, of course, where to find the land. Lam has promised not to take sites set aside for public housing. She has also hinted the government might retract plots from its land sale programme. This would mean forgoing lots of money from land sales, which account for 20 per cent of annual government revenue.

Before that, there are other options. Developers such as Sun Hung Kai Properties and Wheelock Properties have shown an interest in helping to build affordable housing.

Hong Kong market welcomes Lam’s ‘Starter Homes’ scheme for first-time buyers

The problem is that if the scale of their offer is too small, it will be no more than a public relations exercise. But if it’s significant and too profitable, the government stands accused of collusion.

Developers big and small, including the family of the late Heung Yee Kuk supremo Lau Wong-fat, easily own more than 1,000 hectares of empty private land in the New Territories. One reason many such plots stand idle is because of the high market premiums they will have to pay to develop them. For the new scheme, the government can easily reduce premiums in exchange for building cheap flats.

Hong Kong government lacks creative ideas to tackle soaring home prices

Meanwhile, one study estimates the government has reserved about 930 hectares of rural land under the small-house policy. It may have promised ding rights for villagers, but it doesn’t mean villagers, including unborn ones, have an indefinite option on public land. Officials may unilaterally reassign a substantial portion of that land reserve for the new scheme, without the need to consult the kuk.

Will Lam have the guts to do it?