LegCo Paper No. CB(1) 572/96-97
(These minutes have been seen
by the Administration)
Ref : CB1/PL/HG/1

LegCo Panel on Housing

Minutes of Meeting held on Monday, 2 December 1996 at 10:45 am in the Chamber of the Legislative Council Building

Members present :

    Hon LEE Wing-tat (Chairman)
    Hon Frederick FUNG Kin-kee (Deputy Chairman)
    Hon Mrs Selina CHOW, OBE, JP
    Hon Ronald ARCULLI, OBE, JP
    Hon Albert CHAN Wai-yip
    Hon CHEUNG Man-kwong
    Dr Hon YEUNG Sum
    Hon Zachary WONG Wai-yin
    Hon CHAN Kam-lam
    Hon CHAN Yuen-han
    Hon CHEUNG Hon-chung
    Hon CHOY Kan-pui, JP
    Hon LEUNG Yiu-chung
    Hon Bruce LIU Sing-lee
    Hon LO Suk-ching
    Hon SIN Chung-kai

Members absent :

    Hon SZETO Wah
    Hon Edward S T HO, OBE, JP
    Hon Fred LI Wah-ming
    Hon James TO Kun-sun
    Hon Albert HO Chun-yan

Public officers attending :

    Items V and VI

    Housing Branch

    Miss Amy S W WONG
    Principal Assistant Secretary for Housing (Acting)

    Item V

    Housing Department

    Mr HUI Chee-chung
    Assistant Director of Housing (Operations & Redevelopment)
    Mr CHEUNG Koon-nam
    Chief Housing Manager (Operations)

    Item VI

    Housing Department

    Mr Tony Miller, JP
    Director of Housing
    Mrs Clarie LO
    Deputy Director of Housing (Administration)

Attendance by invitation :

    Item IV

    Law Reform Commission of Hong Kong Professor Derek Roebuck, Chairman

    Mr LIU Sing-cheong, Member
    Mr Kennedy WONG Ying-ho, Member
    Mr Thomas LEUNG Moon-keung, Secretary

Clerk in attendance :

      Mrs Vivian KAM

    Staff in attendance :

      Miss Becky YU
      Senior Assistant Secretary (1)3

    I.Confirmation of minutes of previous meetings and matters arising

    (LegCo Papers No. CB(1) 255, 342 and 399/96-97)

    The minutes of the meetings held on 29 July, 16 October and 4 November 1996 were confirmed.

    Matters Arising

    Subcommittee on Long Term Housing Strategy Review

    2. The Chairman reported that at its meeting on 26 November 1996, the Subcommittee discussed the two subjects on housing demand model and lead time for construction of flats. In respect of the second subject, members considered a need for various departments within the Administration to better co-ordinate and expedite the process for construction of flats. A joint meeting with the LegCo Panel on Planning, Lands and Works would be arranged to further probe into the issue, and members would be notified separately. The Chairman supplemented that the Subcommittee would follow-up with the Administration on the release of the Consultation Paper on Long Term Housing Strategy Review.

    II Date and items for discussion at next meeting

    3. The next meeting would be held on Monday, 6 January 1997, at 10:45 am to discuss the subject of "Private residential property prices". Members were requested to inform the LegCo Secretariat should they wish to propose additional items for discussion.

    (Post-meeting note: An additional item on "Rent assistance" was subsequently included on the agenda.)

    III Consultation paper on the sales description of overseas uncompleted residential properties

    (LegCo Paper No. CB(1) 2067/95-96)

    4. The Chairman welcomed representatives from the Law Reform Commission (LRC) to the meeting and thanked them for agreeing to take into account the Panel’s views before finalizing the Subcommittee’s final recommendations on the Sales Descriptions of Overseas Uncompleted Residential Properties.

    5. In referring to paragraph 2.13 of the consultation paper, members noted that while a number of financial measures including stakeholding, trust account, insurance and bond put up by developers had been proposed for protecting the deposits and instalments paid by purchasers of overseas uncompleted properties, these options had shortcomings in meeting purchasers’ claims in the event of delayed completion or project failure. They considered a need for a compensation mechanism to be established in Hong Kong to deal with claims of such a nature. Professor Derek Roebuck emphasized that the main thrust of the report was to ensure that prospective purchasers of overseas uncompleted properties would be protected from false sales statements. He added that while complete protection in respect of deposits and instalments was not possible, the Subcommittee had aimed at devising an efficient and workable system with a reasonable degree of protection. The report had identified some possible redress channels through which consumers in Hong Kong could be protected from false statements. It would be up to the Administration to work out the most practical way of protection for purchasers. Mr LIU Sing-cheong supplemented that while the proposed financial measures might be insufficient, these were viable solutions which could be unilaterally implemented by the Administration. He trusted that implementation of these measures would protect to a certain extent purchasers in the purchase of overseas uncompleted residential properties.

    6. In view of the upward trend of complaints on the sale of properties in the People’s Republic of China (PRC), members considered a need for the Administration to step up cross-border co-operation with authorities in the PRC, as in the case of imported labour from China, so that purchasers could claim against parties concerned in accordance with laws in both jurisdictions. Some members enquired if it was possible for LRC or the Administration to lobby relevant authorities in China to have regard to current practices in Hong Kong when finalizing its reform package on property transactions. While Professor Roebuck and Mr Kennedy WONG Ying-ho agreed that it would be a great step forward in providing a practical solution if co-operation could be established with the authorities in the place where the properties were sold. They emphasized however that this would be outside the Subcommittee’s terms of reference (TOR) as outlined in paragraph 12 of the report; the Subcommittee could only make observations for consideration by the Administration. The Chairman advised that this could be discussed further with the Secretary for Housing and agreed to include this item in the list of outstanding items for discussion for the Panel.

    7. Some members made reference to the system in Hong Kong where progress payments were released to developers in accordance with the actual progress of construction. They asked if it could be a viable means of protection if purchasers were to appoint local solicitors as the stakeholders in order to keep the stakeheld funds in Hong Kong. Mr LIU agreed that this might be feasible in assisting purchasers to recover their deposits and instalments in the event of delayed completion or project failure. However, it would be difficult for local solicitors to ensure that the certificates for progress payments issued by overseas architects were in order. It would also be too onerous on local solicitors to have to continuously monitor the progress of an overseas project which might last for a few years. Moreover, there was the unresolved concern on delay in construction due to factors which fell outside the control of developers. Mr LIU said that the Administration would have to take into account all factors before taking a decision in this respect.

    8. While some members agreed that the options of insurance and bonds put up by developers would be useful for consumer protection, they were of the view that not many local insurers or banking institutions would be keen on providing these services for overseas projects in view of the costs and high risks involved. Consideration should therefore be given to promote and regulate those insurers or banking institutions which were willing to take on the risks so that prospective purchasers would be aware of the protection available. Professor Roebuck reckoned that it would be costly to reduce risks. He stressed that it would be outside both the Subcommittee’s TOR and expertise for assessing risks of that kind and working out the best scheme. In addition, political considerations would also apply. The Subcommittee therefore felt it proper to draw back from the recommendations although it did offer some suggestions. Members were appreciative of the Subcommittee’s stand and restrictions and agreed that this issue would require further consideration by the Panel.

    9. As regards the role of banking institutions in the sales of overseas uncompleted residential properties, Mr WONG advised that purchasers in general would have more confidence in those overseas developments where mortgage facilities were available from banks since inspections of the developments concerned could be conducted before mortgage facilities were made available. The Subcommittee had accordingly recommended that the banks or institutions providing such facilities must be identified in advertisements or the sales brochures. In reply to a related question, Mr WONG advised that the banks would also suffer as a result of such problems as delayed completion or project failure.

    10. Some members sought advice on the possibility of introducing legal measures apart from financial measures since the sales and purchase agreements were signed in Hong Kong. Other members suggested that regulations should be prescribed to restrict the sales of overseas uncompleted residential properties in order to arouse an awareness of the risks involved; they made reference to the drawing up of regulations on suppliers of electrical appliances as a result of an increased number of complaints. Mr WONG advised that the report had recommended a cooling-off period of three days for prospective purchasers to re-consider the transaction and related financial arrangements. In addition, the Subcommittee had recommended that all future sales of overseas uncompleted residential properties would be handled by licensed local estate agents. Members did not agree that estate agents should be held liable for any acts of overseas developers in view of their intermediary role, and emphasized the need to regulate developers concerned. Mr LIU acknowledged members’ concerns but advised that little could be done on slippage in the construction of overseas projects as Hong Kong laws did not, in general, have extraterritorial effect on acts done outside the territory. Moreover, many of the companies concerned were not registered in Hong Kong. Making estate agents primarily responsible for providing sales information would overcome many of the enforcement problems involved in regulating sales descriptions of overseas properties since all estate agents would be regulated by legislation proposed under the Estate Agents Bill. Professor Roebuck pointed out that under the report, estate agents would be given a monopoly over the sales of overseas uncompleted residential property in exchange for the responsibility for the provision of sufficient and accurate sales descriptions to purchasers. This would serve to strike a balance. As for the possibility of identifying a local agent to be held solely responsible for problems arising from the sales of overseas properties, Mr WONG advised that this had not been considered by the Subcommittee. The intention of the report was to apply as far as possible existing practices in property transactions in Hong Kong including the division of labour between architects and solicitors to the sales of uncompleted residential properties overseas.

    11. Hon Albert CHAN Wai-yip was not convinced that problems arising from the sales of overseas uncompleted properties could be resolved through the regulation of estate agents as their responsibilities would cease upon the signing of the sales and purchase agreements. He enquired if the Administration or the LRC would make a suggestion to the Law Society of Hong Kong for issuing guidelines to solicitors to list out conditions in the Deed of Mutual Covenant to protect purchasers’ interest. While Mr WONG was not able to comment on the member’s suggestion as the focus of the Subcommittee was on the sales descriptions, he agreed that such guidelines would be useful for solicitors involved in the sales of overseas uncompleted residential properties. He added that any comments which the Subcommittee might make in this respect would only be confined to some form of observations.

    12. In reply to members, Mr LIU considered it inappropriate for LRC to interfere with investors’ decisions in the acquisition of overseas properties even if the countries concerned did not provide sufficient consumer protection. As regards the time-table for implementation of recommendations in the report, Mr Thomas LEUNG advised that the Subcommittee would present its final report to LRC for endorsement after taking into account public opinions collated during the consultation period. The final report would then be submitted for consideration of the Administration which would where appropriate draft relevant legislation for the approval of LegCo. The Chairman referred to a press statement issued by the Secretary for Housing in which he undertook to consider recommendations ultimately put forward by the LRC.

    13. Before concluding, the Chairman remarked that on account of the restrictive TOR of the Subcommittee, the majority of recommendations in the report were unable to address problems arising from the sales of overseas uncompleted residential properties. Notwithstanding this, the Chairman thanked representatives from the LRC and asked them to take into account members’ views in preparing the final report. In return, Professor Roebuck also thanked the Panel for the opportunity for elaborating on the Subcommittee’s report.

    IV Clearance of squatters on mixed lots

    (LegCo Paper No. CB(1) 398/96-97(01))

    14. The Chairman said that while the Governor had made a pledge for clearing all urban squatters on Government land by March 1996, squatters on mixed lots such as those in Diamond Hill had been left unattended. He considered that at least squatter structures on Government land in mixed lots should be cleared in order to honour the performance pledge. Hon Bruce LIU Sing-lee suggested clearance of the whole lot if the proportion of Government land exceeded a certain percentage in order not to affect unduly the remaining tenants. The Assistant Director of Housing/Operations and Re-development (AD of H/OR) advised that partial clearance was not possible without affecting the remaining tenants. An example would be the market place in Diamond Hill. He further pointed out that squatters on private land could only be cleared after the land had been resumed for a demonstrated public purpose and subject to the availability of re-housing resources. Not all residents of squatters on mixed lots would favour clearance in view of such problems as land management, environmental concerns and transportation facilities which might arise after the clearance. Tradesmen and the Kai Fong Association in Tai Hom Village had already expressed their wish for the status quo to remain. Taking into account the lack of a demonstrated public purpose, divergent views from local residents and the limited supply of public rental housing (PRH) flats in the coming year when only about 10,000 units would be made available for applicants on the General Waiting List (WL), it would be imprudent for the Administration to proceed with the clearance of squatters on mixed lots in Diamond Hill at the present stage.

    15. Hon CHAN Yuen-han expressed concern about elderly households living in Tai Hom and Sheung Yuen Leng Villages in view of the poor living conditions and dilapidated fire fighting facilities. She requested early clearance of these villages having regard to the relatively sufficient supply of PRH flats for re-housing within the district, in particular those in the Lower Wong Tai Sin Estate. Ms CHAN cautioned that if the Administration was unable to clear the squatter areas within a short period, more housing resources would be required as a result of an increased number of legal immigrants from China moving into the areas. AD of H/OR agreed with the need to improve living conditions in squatter areas and advised that the Administration had introduced a squatter area improvement scheme with a view to improving environment and fire fighting facilities in these areas. PRH flats in Wong Tai Sin Lower Estate however could not be used for re-housing tenants of the squatters concerned as these had been earmarked for other re-housing categories, such as residents affected by comprehensive redevelopment programmes and WL applicants. AD of H/OR took the opportunity to clarify that legal immigrants from China would not become eligible for PRH by virtue of living in squatter areas unless they were covered by the 1984/85 Squatter Occupancy Survey (SDS). Those who were not covered by this survey would only be offered interim housing upon clearance of the squatter areas.

    16. In response to members on local residents’ opinions regarding the clearance programme, the Chief Housing Manager/Operations advised that according to the survey conducted by a non-governmental organization, 60% of the respondents would not be eligible for PRH as they were not covered by the 1984/85 SDS. Nevertheless, 90% of them expected to be re-housed to PRH flats within the same district upon clearance. As to whether the Administration would conduct its own survey to ascertain the aspirations of these residents, AD of H/OR considered it inappropriate to conduct surveys before a demonstrated public purpose had been identified and a clearance programme had been drawn up as this would create false hopes for some of the residents concerned.

    17. While acknowledging the need for re-housing resources in the event of squatter clearance, the Chairman said that this should not affect the Administration’s commitment for clearing all urban squatters by March 1996 as this was a pledge which should be fulfilled. The Principal Assistant Secretary for Housing (Acting) emphasized that the Administration had completed its pledge in the 1992 Policy Commitments to clear all urban squatters on Government land by March 1996; squatters on mixed lots in urban areas did not come within the pledge. These would be cleared subject to a demonstrated public purpose. The Chairman was dissatisfied with the Administration’s interpretation of the 1992 performance pledge. He considered that squatters built on Government land in mixed lots should be cleared in accordance with the pledge regardless of whether there was a demonstrated public purpose. Ms CHAN remarked that clearance of the 19th Alley of Sheung Yuen Leng Village ran contrary to the Administration’s perception as some of the structures were built on private land. AD of H/OR explained that the community referred to had been cleared on account of a demonstrated public purpose and the private lots concerned had been reverted to the Government prior to clearance.

    18. Members asked if decisions on squatter clearance of mixed lots were made on the basis of ratios between Government and private land in the lots, and if so, what the standard ratio was. AD of H/OR re-iterated that squatter areas on private land would be cleared subject to a demonstrated public purpose and the availability of re-housing resources, and that reference was not made to the ratios between Government and private land. The Administration was commited to clearing squatter areas in both Diamond Hill and Lei Yue Mun when specific development purposes had been identified. While Hon CHAN Kam-lam acknowledged the need for the Administration to expedite clearance in view of the poor living conditions in squatter areas, he cautioned that re-housing resources should be made available before announcement of the clearance in order to minimize resistance from residents concerned, as in the case of clearance in Lei Yue Mun. Mr CHAN also considered a need for the Administration to review its planning strategy for squatter areas, and asked if private developers would be invited to participate in the development of Sheung Yuen Leng and Ha Yuen Leng Villages. AD of H/OR shared the member’s concerns and advised that a lead-time of 12 months would be required for each clearance programme in order for the Administration to work out the re-housing arrangements and inform residents concerned. He also undertook to convey members’ views to departments concerned with a view to expediting clearance programmes. In reply to a related question, AD of H/OR advised that compensation for resumption of private land was dealt with by the Lands Department.

    19. Some members suggested that the Chairman should seek clarification from the Administration on the interpretation of the pledge in the 1992 Policy Commitments for clearing all urban squatters on Government land by March 1996. The Chairman advised that he would check on past records before taking a decision.

    (Post-meeting note: At the Chairman’s instruction, the Panel wrote to the Administration on 4 December 1996 to follow-up on the issue.)

    V Strengthening of senior directorate structure of Housing Department

    (LegCo Paper No. CB(1) 398/96-97(02)

    20. At the invitation of the Chairman, the Director of Housing (D of H) highlighted salient points in the information paper. The splitting of the Deputy Director/Housing Management and Works (DD/HMW) post (D4) into Deputy Director/Housing Management (D4) and Deputy Director/Works (D4) had been proposed on account of the increased complexity and magnitude of DD/HMW’s duties, as well as the launching of the Management Enhancement Programme (MEP) which was aimed at changing the staff culture and enhancing the overall performance of the Housing Department (HD). Taking into account the size and coverage of MEP, an additional Principal Executive Officer (D1) post would be required to provide directorate support for the implementation of MEP. Lastly, in order to reflect the enhanced role and responsibilities of the Assistant Director/Finance post (D2), an upgrading of the post to Deputy Director/Finance had been proposed. The senior directorate hierarchy of HD upon restructuring would consist of one D7, two D4 and six D3 posts as compared with the current structure of one D7, one D4 and five D3.

    21. Members found it difficult to consider the proposals in the absence of such supporting documents as the existing and proposed organizational charts and job descriptions for the posts concerned. They also considered it uncommon for the Administration to propose the addition of senior directorate posts of one D3 and one D4 for the same department at the same time. Furthermore, the proposed high proportion of two D4 and six D3 posts in HD ran contrary to the Administration’s intention of achieving a simplified and efficient management structure. In response, D of H advised that the information paper aimed to provide members with the background to the proposals and details would be provided when the proposals were submitted for consideration by the Establishment Subcommittee (ESC). To address members’ concern, D of H undertook to provide the organizational charts and job descriptions to the Panel after the meeting. Members were mindful of unduly heavy senior directorate structures such as that of the Hospital Authority and emphasized the need for sufficient supporting documents to facilitate the consideration of staffing proposals.

    22. Some members were not convinced that the workload of HD would increase having regard to the increased number of projects to be contracted out, such as the privatization of estate management and carparks in some PRH estates, and the establishment of Estate Management Advisory Committees. D of H stressed that reform was not an easy task, in particular for such long-term projects as MEP which would require the close attention of senior directors. Moreover, the workload of HD was expected to surge during the planning period for various initiatives such as that of the privatization of estate management which was only at an experimental stage. Full-scale implementation for the rest of the 160 PRH estates would depend on the outcome of the pilot scheme in three estates and would involve significant planning work. The Deputy Director of Housing/Administration (DD of H/A) supplemented that a consultant had been commissioned to conduct a study on the customer-focused and performance-oriented MEP. The report was expected to be available by the end of December 1996 and would be submitted to the Housing Authority (HA) for endorsement in early January 1997. DD of H/A undertook to provide a copy of the report to the Panel after this had been cleared by HA.

    23. Members agreed that the Panel had taken note of the staffing proposals but that it would be imprudent for the Panel to make any recommendations at that stage. Before concluding, the Chairman instructed that a copy of the minutes of the meeting be forwarded to the ESC for consideration.

    VI Any other business

    24. There being no other business, the meeting closed at 12:50 pm.

    Legislative Council Secretariat
    20 December 1996