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The Government proposes to amend the Housing Ordinance to introduce a new income-based rent adjustment mechanism for public rental housing.
The Housing (Amendment) Bill 2007 (the Bill) will be published in the Gazette on Friday (January 19) and introduced into the Legislative Council for first and second reading on January 31.
It seeks to replace the statutory 10% median rent-to-income ratio (MRIR) cap with a rent adjustment framework that provides for both upward and downward rent adjustments according to changes in public rental housing tenants' household income.
"The income-based rent adjustment framework would help ensure tenants' rental affordability and promote the long-term sustainability of the public rental housing programme," a spokesman for the Housing, Planning and Lands Bureau said today (January 17).
"The new rent adjustment mechanism would also provide a more transparent and objective basis for rent adjustment, and would ensure a more efficient and justifiable use of public resources," he added.
The Bill empowers the Housing Authority to compile an income index to track the movement in public rental housing tenants' household income and requires the authority to vary rent according to the rate of the increase or decrease of the income index, unless the amount of the variation is considered by the authority to be insignificant.
The Bill also requires the authority to review public rental housing rent every two years and not to vary the rent within two years after the commencement of the Amendment Ordinance or after the preceding rent variation.
To provide an appropriate starting point for the proposed income-based rent adjustment mechanism to operate effectively, the authority has agreed to adjust the existing public rental housing rent according to the extent of changes in the income index since 1997, i.e. an across-the-board rent reduction of 11.6% upon the passage of the Bill. The average public rental housing rent would reduce from $1,480 to $1,310 per month, making the rental expenditure of some 70% of the tenants below $1,500.
Under the proposed new mechanism, changes in MRIR will no longer play any part in determining rent adjustments.
"Adopting the MRIR as a rent adjustment mechanism in the current legislation is highly inappropriate since an increase in the ratio can be triggered by a number of extraneous factors other than changes in individual tenants' rent and household income," the spokesman said.
These extraneous factors include increase in the number of public rental housing tenants receiving Comprehensive Social Security Assistance, increase in the number of elderly or small households which tend to have lower income, exit of high income tenants, allocation of bigger flats and replacement of old public rental housing estates with new ones.
The legislative proposal has been mapped out following a comprehensive review of the authority's domestic rent policy and extensive public consultation involving local residents, housing concern groups, District Councils, Legislative Council Panel on Housing and major political parties.
Ends/Wednesday, January 17, 2007
Issued at HKT 17:18
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