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The following is issued on behalf of the Housing Authority:
Housing Authority (HA) Members today (November 27) endorsed the Report on the Review of Domestic Rent Policy recommending, among other things, a new rent adjustment mechanism based on changes in the household income of public rental housing (PRH) tenants.
"An income index tracking the movement in PRH tenants' household income will be developed to determine future rent adjustments," a spokesman for the HA said.
"Implementation of the new rent adjustment mechanism enabling PRH rents to move both upwards and downwards in tandem with tenants' household income is contingent upon successful passage of the necessary legislative amendments to the Housing Ordinance," the spokesman said.
An amendment Bill to replace the 10% median rent-to-income ratio (MRIR) cap in the current Housing Ordinance by the new rent adjustment mechanism will be introduced into the Legislative Council in the fist quarter of 2007.
"Over the long run, the new rent adjustment mechanism is far more sustainable than the existing statutory 10% MRIR cap under which PRH rent can only go down once the cap is exceeded," he added.
To enable the new rent adjustment mechanism to operate effectively and fairly, the HA agreed that the current PRH rent should be adjusted with reference to the income index to provide a new starting point that is considered appropriate and acceptable to the community.
"Given that the rent of the majority of the existing PRH units and the "best rent" for newly completed units were last reviewed in 1997, it is decided to adopt a uniform rate of adjustment according to the extent of changes in the income index since 1997, i.e., an across-the-board rent reduction of 11.6%. The same rate of adjustment should also be applied to the "best rent" for newly completed PRH estates," the spokesman said.
"This long-term rent reduction, resulting in an annual rental loss of about $1,410 million, will be introduced when the necessary administrative and legal framework is in place to effect the new rent adjustment mechanism," he added.
Explaining the key features of the new rent adjustment mechanism, the spokesman said that the income index can reflect more accurately the pure income changes of PRH tenants by discounting the potential distortion of the overall household income brought about by variations in household size distribution.
For compiling the income index, HA will operate its own mandatory declaration system under which income data will be collected from 1,500 to 2,000 sampled PRH households every month starting from January next year.
A biennial rent review cycle covering all PRH tenants will also be introduced to achieve a more moderate rent adjustment in every review and allow the HA to react more quickly to changes in socio-economic circumstances.
Apart from the new rent adjustment mechanism, the Report on the Review of Domestic Rent Policy also contains recommendations on a number of aspects central to the HA's domestic rent policy. These include:
(a) the MRIR will no longer play any role in determining future rent adjustments. It will, however, still be used to track tenants' affordability. To improve the assessment methodology of the MRIR, both Comprehensive Social Security Assistance households and additional rent-payers will be excluded from the calculation. The current two MRIR benchmarks of 15% and 18.5% for the respective space allocation standards of 5.5 m2 internal floor area and 7 m2 IFA per person will remain applicable;
(b) while differential rent will not be pursued, a four to six months' rent-free period for tenants moving to units that have been vacant for 12 months or above will be introduced. Detailed implementation framework will be submitted to the Subsidised Housing Committee for consideration in early 2007;
(c) the current arrangements of having two rent fixing exercises every year for newly completed estates should be maintained;
(d) PRH rent will continue to be inclusive of rates and management fees. To enhance transparency, an annual statement setting out separately the amount of rates and management fees will be issued to tenants starting from the fourth quarter of 2007;
(e) the current system of monthly tenancy should continue to be adopted. The issue of perpetual stay by tenants who are no longer in need of housing subsidies should, if necessary, be dealt with more effectively through a review of the Housing Subsidy Policy and the Policy on Safeguarding Rational Allocation of Public Housing Resources;
(f) the planning and allocation of PRH should follow more closely the established space allocation standards and the general trend towards formation of small households to better match tenants' affordability; and
(g) to further enhance the effectiveness of Rent Assistance Scheme (RAS), publicity on the Scheme should be stepped up and more detailed guidelines, particularly concerning when and how the requirement to move to flats with lower rents should be applied, should be drawn up for frontline staff to follow.
The Report on the Review of Domestic Rent Policy was submitted by HA's Ad Hoc Committee on Review of Domestic Rent Policy following a three-month public consultation.
Members of the public are welcome to visit the HA/HD website at http://www.housingauthority.gov.hk to view the report. Printed copies of the full report and a pamphlet summarising the recommendations will be available at all district offices and HA's estate offices starting from December 6.
Ends/Monday, November 27, 2006
Issued at HKT 19:17
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