LCQ16: Combating acts of speculating on Home Ownership Scheme flats
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Question:
Recently, some media have uncovered that quite a number of owners of private flats put up their Home Ownership Scheme (HOS) flats which had never been occupied (commonly known as unmodified flats) for sale at high prices in the market after they had been allocated such flats by ballots in the names of their relatives, and they often made huge profits of several million dollars. In this connection, will the Government inform this Council:
(1) whether it knows and whether it has investigated the aforesaid cases of reselling unmodified HOS flats for profiteering; if it has investigated, of the outcome;
(2) whether the aforesaid cases, which aimed at reselling unmodified HOS flats for profit, have violated the deed of covenant of HOS flats, the code on the purchase of HOS flats (if any), or breached any legislation;
(3) it is learnt that in order to combat acts of only selling but not living in Housing and Development Board (HDB) flats, the Government of Singapore has purposely added in the provisions on the purchase and sale of HDB flats a restriction on the minimum occupation period and measures such as conducting random checks monthly on vacant HDB flats, whether the Government has considered formulating similar policies for HOS flats; if so, of the details; if not, the reasons for that;
(4) as some property agents have pointed out that the unmodified HOS flats put up for sale in the market are mostly large one- to two-room flats which are in demand and of high prices, and multiple-member families with actual housing demands are often forced to purchase studio or even nano HOS flats, whether the Government has considered formulating for HOS flats policies similar to the Mainland's policy that "houses are for living in, not for speculation" to eradicate acts of speculating on HOS flats;
(5) as some members of the public have pointed out that a number of recent cases of selling new and large HOS flats at high prices for profit involved HOS flats purchased through participating in the Priority Scheme for Families with Elderly Members, and they have queried that the Scheme has been abused and has also affected the opportunities for young couples and families with genuine housing needs to be allocated flats, whether the authorities have reviewed if the owners in recent cases of selling unmodified HOS flats purchased HOS flats through participation in the Scheme; if they have reviewed and the outcome is in the affirmative, whether they will consider assessing the effectiveness of the Scheme afresh and endeavour to elevate the chances of young family applicants and applicants with childbearing plans to successfully purchase large one- to two-room HOS flats; and
(6) whether it has studied requiring that owners of HOS flats must, after selling their HOS flats for profits, share a certain percentage (e.g. 50 per cent or 70 per cent) of the profits so obtained with the Treasury of the Government, or even strictly restricting the sale of HOS flats by their owners by requiring that they can only sell the flats at prices set according to cumulative inflation to eligible applicants under the White Form Secondary Market Scheme or persons eligible for Green Form status, so as to reduce the incentive to speculate on HOS flats for profit?
Reply:
President,
The consolidated reply to the questions of the Hon Paul Tse is as follows:
(1) to (4) According to the Agreement for Sale and Purchase for subsidised sale flats (SSF) executed between the purchaser and the Hong Kong Housing Authority (HA), the property concerned should be occupied by the purchaser himself/herself and all the members of his/her family named in the application form. If, without the prior written consent of the HA, the purchaser and any family member ceases to actually or permanently live in the property, the HA has the right to require the purchaser to assign the property back to the HA. The Housing Department (HD) is currently conducting investigation on certain cases which are suspected of violating the above conditions and will take follow up action as appropriate.
(5) To encourage eligible families to live with elderly members, the HA launched the "Priority Scheme for Families with Elderly Members" in 1998. Under the scheme, family applicants for Home Ownership Scheme (HOS) with at least one elderly member aged 60 or above can apply and be granted priority in flat selection over other family applicants. To curb potential abuse, the scheme requires that at least one elderly family member to be an owner or a joint owner of the purchased flat. The applicant and family member(s) listed in the application form have to undertake that they are willing to live together with that elderly family member in the purchased flat.
As for home ownership aspirations of young families, the Government has been sparing no efforts in identifying land for housing construction so as to address the housing needs of different sectors, including the sandwich class families and the youth. We are also committed to enriching the housing ladder, including revising the pricing policy for HOS by delinking the selling price of the flats with the property prices in the private market to make them more affordable; introducing the "Starter Homes" pilot projects for Hong Kong residents; and regularising the Green Form Subsidised Home Ownership Scheme (GSH) and the White Form Secondary Market Scheme, etc. As a matter of fact, take the Sale of HOS Flats 2020 as an example, nearly half of the applicants who successfully purchased flats were youths aged 40 or below. We are increasing the public housing supply by enhancing quantity, speed, efficiency and quality. With the increased supply of SSFs, more young families will be able to achieve home ownership.
(6) In order to prevent SSF owners from speculating on SSFs to make gains in the short term, the HA imposed alienation restrictions of HOS upon its introduction in 1978 and established the key principles for considering the duration of the restriction period: prevent speculative activities on the one hand, and avoid unduly undermining the attractiveness of the flats and hence lowering the applicants' desire to purchase on the other hand. The HA has been monitoring the property market closely, reviewing and revising the relevant alienation restrictions as appropriate from time to time in accordance with the aforementioned principles. In January 2022, the HA further tightened the alienation restrictions of the newly launched SSFs, including HOS and GSH flats. Starting from the Sale of HOS Flats 2022 and the Sale of GSH Flats 2022 onwards, the period where the owners can only sell at not more than the original price in the Secondary Market with premium unpaid will be lengthened from the first two years since first assignment to the first five years; while the restriction period for sale in the open market after payment of premium will be lengthened from the first 10 years since first assignment to the first 15 years.
When the HA revised the alienation restrictions, it had already balanced the calls from the public for tightening the alienation restrictions and the need to enable circulation of SSFs in the market, especially in the Secondary Market. Further tightening the restrictions or increasing the transaction cost will inevitably reduce the supply of SSFs with premium unpaid in the Secondary Market, thereby driving up the prices in the Secondary Market. This will counteract the intention of curbing price increase, which goes against the objective of addressing the home ownership aspirations of low- to middle-income families.
Ends/Wednesday, May 3, 2023
Issued at HKT 12:15
Issued at HKT 12:15
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