Hong Kong government to cover losses of subsidised flat providers amid bigger discounts, Carrie Lam says
Financial arrangement meant to address fears over long-term viability
The Hong Kong government alone will help providers of subsidised flats amid a plan to offer bigger discounts, the city’s leader vowed on Tuesday.
Chief Executive Carrie Lam Cheng Yuet-ngor said the financial arrangement would cover both the Housing Authority and the Housing Society – the city’s main providers of public and subsidised flats respectively.
The government “will be solely responsible for financial issues” arising from the new pricing, she announced in remarks delivered before her weekly Executive Council meeting.
Lam said she would meet in person with Housing Society chairman Marco Wu Moon-hoi to discuss the issue.
Wu last Saturday said the non-profit organisation could lose “up to HK$1 million (US$127,000)” per flat sold under the Home Ownership Scheme, which targets the city’s low- and middle-income families by offering subsidised rates. The government plans to lower the prices for such flats from 70 to 52 per cent of market value.
The Housing Society chairman had also asked for a chance to discuss a long-term financial arrangement with officials that would enable the group “to survive”.
Lam on Tuesday did not explain how the government intended to make up for the losses the Housing Society could experience. But she said a solution would lie in an existing financial arrangement between the government and the independent statutory body; specifically, the group would be required to pay the government for the land used for developing housing.
“The problem does not seem difficult to resolve,” she added.
According to Wu, the society is currently required to pay half of the land’s market value.
He noted earlier the Housing Authority had a different arrangement whereby it was only required to pay for costs associated with getting sites ready for construction.
Lam also said on Tuesday the new discounted rate would not cover all flats built by the authority.
Instead, it would apply to flats built on land whose leases stipulate the prices must be approved by the government.
Pricing for subsidised flats – including those in the Home Ownership Scheme flats and starter homes – would be based on the affordability of their target audience, Lam reiterated.
The new discounted rate for subsidised flats was one of six housing measures Lam announced on June 29 to help address the city’s housing crisis.
Other measures included imposing a tax equivalent to two years of rental income on vacant flats and reallocating nine sites originally slotted for private flats towards developing public housing.
The Housing Society is an independent statutory body acting as a bridge between public housing and the private sector. It is meant to be self-financing. The government subsidises its housing projects by granting it sites for building affordable flats.