Why is Hong Kong not protecting its people’s housing rights, as Vancouver does?
Albert Cheng says a tax on vacant property will do little to increase the supply of affordable housing. The Hong Kong government should learn from Vancouver, which has a raft of measures in place to ensure adequate housing for sale and rent
Financial Secretary Paul Chan Ma-po’s revelation that the government is looking into the possibility of imposing a tax on vacant properties has led to concerns about interference in Hong Kong’s free-market economy. However, many people have also applauded this indication of further measures to curb property market speculation.
Opinion is divided on the feasibility of a tax on vacant property. Whatever the verdict, the so-called cooling measures intended to rein in price increases in Hong Kong’s red-hot property market divert attention away from the crux of the problem, which is that, in Hong Kong, real estate developers are the ones calling the shots.
It’s time for the government to put forward a workable solution. The tax on vacant property is not it.
As Chan himself has noted, the tax will hit only a small group of insignificant investors, but not the property developers who hoard land to manipulate the housing supply. If the government is determined to increase the supply of affordable housing in Hong Kong, it should tackle the root of the problem and impose a tax on idle land instead. This would be more effective in pressuring developers to build more private housing.
The government should learn from other cities. Take Vancouver for example. The Canadian city is smaller than Hong Kong’s Yuen Long in size and has a population of around 600,000. Over the past few years, property prices in Vancouver have surged. Residents who have been living in Vancouver all their lives are disgruntled, as some have been forced to move outside the city due to the high prices.
The British Columbia government announced in its latest budget that it is raising a tax targeting foreign buyers and will also introduce a levy on speculators. The purpose of these measures is to ensure adequate rental housing supply.
Besides cracking down on property speculation, the government has also capped the amount of rent increases, at no more than 4 per cent for 2018. Landlords are also forbidden from cancelling or changing the tenancies without the consent of the tenants. Unless the landlord and tenant agree to another fixed term, the tenancy will continue on a month-to-month basis under the original terms.
Tenants are protected in other ways. In any property redevelopment, developers are expected to keep the same number of flats for rent as before. They can be fined if they fail to do so, and the fines will be put towards affordable housing programmes.
In Hong Kong, developers who win the consent of at least 80 per cent of the landlords in a building may apply for a compulsory sale of the building, and no similar protection for tenants is in place.
Cooperative housing is also common in Vancouver. This is a long-term programme that offers cheaper housing for low-income earners. In most cases, the rent is fixed at around 25 per cent of the tenant’s income before taxes. The Vancouver government has been raising the plot ratios to support more housing of this kind and increase the rental supply.
In Hong Kong, developers are awarded a higher plot ratio if they include more public open space in their private housing projects. However, there have been cases where developers did not make such designated space accessible to the public after the project’s completion.
In sum, the residential rights of local people is the Vancouver government’s top priority, even in the face of a heated property market stoked by an inflow of hot money. Chief Executive Carrie Lam Cheng Yuet-ngor should study these examples and begin to safeguard the residential rights of Hong Kong people. If the housing problem remains unsolved, her administration will have to bear the bad consequences that will be sure to follow.
Albert Cheng King-hon is a political commentator. [email protected]