Hong Kong housing

Land premiums unlikely to come down under Starter Homes scheme, Hong Kong leader Carrie Lam says

Chief Executive Carrie Lam Cheng Yuet-ngor said she would try to find other ways to encourage developers to join scheme

PUBLISHED : Tuesday, 31 October, 2017, 8:52pm
UPDATED : Wednesday, 01 November, 2017, 9:05am

Hong Kong’s leader has poured cold water over suggestions that the government lower land premiums for developers taking part in its new housing initiative for young, middle-income families.

Against the backdrop of an overheated property market, Chief Executive Carrie Lam Cheng Yuet-ngor said at a business forum on Tuesday that housing is an “extremely complicated and difficult issue” the government is dealing with.

She was asked whether the government would consider lowering the land premium for developers joining the government’s Starter Homes scheme.

Will Hong Kong’s Starter Homes scheme help young families get on property ladder or fatten the pockets of developers?

Under the scheme, buyers who meet certain criteria – for example, a family of two or more making no more than HK$68,000 a month – would qualify to buy flats built by private developers but with the government ensuring that prices are affordable.

“I would be very hesitant to attract developers to join the scheme by offering lower premiums. We will have to find other means to ensure that this type of cooperation … will be a win-win,” she said.

She did not explain how the government would encourage developers to take part in the scheme, saying only that it would “unlikely” be done through lowering the premiums.

Land premiums are payments developers make to the government if they wish to change the use of their land.

Home ownership has increasingly become a remote dream for middle-class Hongkongers, with the city’s land shortage fuelling property speculation and driving up prices.

Under the Starter Homes scheme, the first pilot project will be on Anderson Road in Kowloon, providing 1,000 flats.

Developers have shown support for the scheme since it was announced about three weeks ago. Tycoon Walter Kwok Ping-sheung, chairman of Empire Group Holdings, had earlier called for incentives for developers to take part, but did not go into detail.

A Sun Hung Kai Properties spokesman said on Tuesday that the company supported the scheme but did not elaborate further, noting that details of the scheme have not been announced yet.

How Hong Kong’s Starter Homes scheme for young couples compares with Singapore, Shanghai, London and Guangzhou

Dr Mo Pak-hung from the Hong Kong Baptist University’s business school said on Tuesday the government has to make sure that the cheaper flats under the scheme would not mean their quality would be compromised.

In her policy address, Lam also said that the Central Policy Unit would be revamped into a “Policy Innovation and Co-ordination Unit”.

Lam said on Tuesday: “One of the new assignments I am going to give to this new office is … to review the obsolete legislation to facilitate new forms of economy, and to provide a business friendly environment.”

She added: “The reason why it has to be assigned to a unit outside of the 13 bureaus is because I suspect there will be some resistance within the government’s bureaux. They have been very used to these sort of legislations, rules and procedures.”