Helping more Hongkongers own a home should be Carrie Lam’s goal – not creating more dependency
Mike Rowse says the controversy over the number of available public rental housing units obscures a more important fact – home ownership rates here are poor compared with our neighbours’, and raising them is a necessity
You have to admit it’s a tough life for senior Hong Kong government officials. Fail to pose the right question on a sociopolitical issue or answer incorrectly and people will attack for lack of competence. Get both correct but neglect to detail how the conclusion was reached and people will criticise for lack of transparency. Get the question and answer right with sufficient reason given, and officials find they have stepped on the sensitive toes of a vested interest.
Take, for example, the brouhaha over the right number of public rental housing units. Chief Executive Carrie Lam Cheng Yuet-ngor told a local newspaper there are 760,000 publicly owned housing units for rental, and projects in the pipeline would soon bring the total to 800,000. Lam’s remarks could be taken to mean this would be enough to meet demand from the less well off, although she didn’t say so explicitly. Instead, she talked about the desirability of giving more assistance to people to buy their own homes. Be that as it may, Lam explicitly denied setting a ceiling on the number of public rental units, as she faced pressure from critics who falsely claimed she had imposed one.
Hong Kong leader Carrie Lam faces questions from all sides despite apology for ‘800,000 flats’ comment
Setting aside the bluster, what is really going on here? For one thing, we are in danger of losing sight of the main issue. The rate of home ownership in Hong Kong fares poorly next to all of our main comparisons. Singapore is at around 91 per cent. The mainland is at 90 per cent (including, according to the BBC, 70 per cent for millennials). Hong Kong is stuck at 51 per cent.
There are many advantages of more home ownership. Those with a tangible stake in the stability and prosperity of their community are more likely to behave as responsible citizens and take an interest in public affairs. You don’t seek to destroy what you own, or let others do so. You have peace of mind for your own long-term living arrangements and an asset to pass on to the next generation. Alternatively, you can use the property as security for a loan to start a business, or meet urgent spending needs. Home ownership frees the individual and instils confidence.
A lower rate of home ownership, by contrast, means more demand for rental accommodation. High prices mean pressure for a greater role from the government in ensuring affordable housing, either by rent control for privately owned apartments (not popular politically, and not effective in the long run) or direct provision by a publicly funded housing authority. In Hong Kong, 35 per cent of the housing stock is public rental units. The danger is that such a situation can engender a culture of dependency.
Some politicians, particularly those competing for grass-roots support, welcome such circumstances, though they do not say so out loud. The 800,000 units will house well over a million voters. Candidates who promise that tenants can never be evicted and rents will never rise in real terms are likely to be re-elected. One of Lam’s critics pointed out that the rent of public flats is deemed to include rates and management charges. Moreover, tenants are not required to contribute to the costs of the major repair and redecoration exercises every 10 or 20 years. He failed to mention that all these are real costs that have to be met by someone. Perhaps as a first step, monthly receipts given to tenants should separately itemise rates, management charges and a levy to cover future refurbishment costs so the net amount for actual rent is more clearly visible. This is not to demean the recipients of public largesse, but clearly show all concerned the actual situation.
Every long-term resident of Hong Kong is aware that, over the years, many abuses have crept in, and tens of thousands of public rental flats are occupied by people who no longer merit assistance. Eliminate these abuses, and I suspect the number of such units needed to meet real demand would be much lower than the number we already have.
But leave that to one side: the arguments for assisting more local citizens to own their own homes are overwhelming. Lam should set a specific target of raising the overall home ownership percentage by at least 5 points during her first term, and an additional 5 if she seeks a second term.
There’s no place like home – especially if you own it.
Mike Rowse is the CEO of Treloar Enterprises. [email protected]