LegCo Paper No. CB(1) 1895/96-97
(These minutes have been seen
by the Administration)
Ref : CB1/PL/HG/1

LegCo Panel on Housing

Minutes of meeting held on Monday, 12 May 1997, at 4:30 pm 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 SZETO Wah
    Hon Albert CHAN Wai-yip
    Hon James TO Kun-sun
    Hon Zachary WONG Wai-yin
    Dr Hon YEUNG Sum
    Hon CHAN Kam-lam
    Hon CHOY Kan-pui, JP
    Hon LEUNG Yiu-chung
    Hon Bruce LIU Sing-lee
    Hon LO Suk-ching

Members absent :

    Hon Edward S T HO, OBE, JP
    Hon Ronald ARCULLI, OBE, JP
    Hon CHEUNG Man-kwong
    Hon Fred LI Wah-ming
    Hon CHAN Yuen-han
    Hon CHEUNG Hon-chung
    Hon Albert HO Chun-yan
    Hon SIN Chung-kai

Public officers attending :

    Items IV, V and VI

    Housing Branch

    Mr Andrew R Wells
    Deputy Secretary for Housing
    Mr Parrish NG
    Principal Assistant Secretary/Housing (2)

    Item IV

    Housing Department

    Mr C C HUI
    Assistant Director/Operations and Redevelopment
    Mrs Doris MA
    Assistant Director/Development

    Item V

    Hong Kong Housing Society

    Mr Victor SO
    Executive Director
    Mr Francis LAW
    Director/Planning and Development
    Finance Branch
    Mrs Violet CHAN
    Chief Treasury Accountant/Investment

    Item VI
    Housing Department

    Mr Y K CHENG
    Chief Housing Manager/Applications
    Mr Simon LEE
    Legal Adviser

Clerk in attendance :

    Mrs Vivian KAM
    Assistant Secretary General 1 (Acting)

Staff in attendance :

    Ms Bernice WONG
    Assistant Legal Adviser 1
    Mr George CHAN
    Senior Assistant Secretary (1)3

I Confirmation of minutes of previous meetings

(LegCo Papers No. CB(1) 1424, 1425 and 1426/96-97)

The minutes of meetings held on 3 March 1997 and 7 April 1997, and of the joint meeting with the Welfare Services Panel on 7 April 1997 were confirmed.

II Date of next meeting and items for discussion

2. The next meeting would be held on Monday, 2 June 1997, at 10:30 am, and the agenda would include "housing planning to cope with population projection". The Chairman would consult the Deputy Chairman on other agenda items for the meeting.

III Information paper issued since last meeting

3. No information paper had been issued since the last meeting.

IV Interim Housing

(LegCo Paper No. CB(1) 1487/96-97(01))

4. Before discussions, the Chairman remarked that papers from the Administration for the meeting were again late and reminded the Administration to make a better effort to send in papers on time.

5. The Deputy Secretary for Housing (DS for H) introduced the information note on Interim Housing (IH), drawing attention to paragraph 6 about the construction of two low-rise prefabricated IH blocks at Sha Kok Mei (Sai Kung) and Long Bin (Yuen Long), and to paragraph 7 about a proposal for developing two new high-rise IH projects in Tuen Mun and Tin Shui Wai.


6. On the construction cost, the Chairman pointed out that Appendix B compared the cost per unit rather than per square metre, and thus gave the wrong impression that IH units incurred a much lower cost than Harmony-3 public rental housing (PRH) units. In fact, the costs per square metre were similar, the margin being about $200 out of $5,000. This being the case, it would be injudicious to opt for an inferior type of housing. Furthermore, Harmony-3 would also enable tenants of old PRH estates to improve their living conditions and in turn free PRH units for reallocation to people in genuine need. In consideration of the above, the Chairman enquired if resources could be put to better use by building Harmony-3 type estates instead of IH.

7. The Assistant Director of Housing (Operation and Redevelopment) (AD of H (O & R)) replied that while the construction cost between the two types of housing was comparable, IH would benefit a larger number of households than Harmony-3. One IH floor would accommodate 36 households, as compared to 20 on a Harmony-3 floor. IH would meet urgent housing needs arising from clearance of Squatter Areas and Temporary Housing Areas (THA), and groups of THA tenants not eligible for PRH could be properly accommodated immediately instead of being made homeless.

8. DS for H clarified that Appendix B was not intended to be misleading. In considering cost, opportunity cost must also be taken into account as delayed clearance of THAs would impede other public housing projects. Nevertheless, the Administration would duly consider members’ views before making a final decision.

9. A member appreciated the need for mixed types of public housing to meet housing demand and had no objection to the idea of IH. He was concerned, however, about the location of the sites and remarked that sites in more accessible areas such as Tseung Kwan O would be more acceptable. He also enquired about the maintenance cost of prefabricated blocks and the rent level for IH blocks. AD of H (O & R) took note of the opinions and advised that the prefabricated blocks met the required standards for strength and durability, and their quality and maintenance should not be a cause for concern. IH blocks were comparable to other public housing blocks in terms of the length of their useful life. The rent level for IH blocks was under discussion with HA and the Administration would aim at arriving at a reasonable level.

Policy direction

10. Some members commented that the IH proposal reflected a general weakness in public housing policy. In trying to solve THA clearance problems, the Administration was creating new problems and unfairness. The IH proposal would swing THA clearees from one end of the pole to the other, while long-timers in old PRH estates waited in vain for better housing conditions. This would be open to criticism. Members were of the view that to put the issue in its proper perspective, land earmarked for permanent housing purposes should not be used for temporary housing purposes. The IH proposal was a simple solution to meeting the Governor’s commitment on THA clearance, but the same commitment could also be achieved through redevelopment and resettlement. Members therefore urged that efforts be concentrated on more efficient programmes of constructing new PRH units and refurbishing old ones. The direction should also be to increase land supply, expedite housing construction, and settle THA clearees directly without the IH transit.

11. A member felt that settling all THA clearees to the IH sites in Tuen Mun and Tin Shui Wai had the effect of removing them from the urban fringe to remote areas. He was worried that this would be the covert policy for the future, and deviate from the practice of resettlement in the same district. AD of H (O & R) advised that THA clearees had on previous occasions been resettled in the New Territories, and PRH in Tuen Mun was getting increasingly popular as people overcame their initial reluctance and made use of the community services and facilities available. He clarified that the choice of the two IH sites was incidentally a matter of availability of sites, and reckoned that it would be impracticable to secure IH sites in or near urban areas.

12. DS for H affirmed that IH would meet medium-term as well as urgent housing needs for THA clearees. He assured members that targets of THA clearances would not be accomplished at the expense of permanent public housing needs. This would apply also to the two IH sites in Tuen Mun and Tin Shui Wai. Regarding overall policy, DS for H shared members’ views on the long-term need for adequate and suitable land.

Refurbishment of older public rental blocks

13. A member disagreed with the refurbishment of old PRH blocks as a solution to THA clearances, on the basis of complaints from tenants about the conditions of the aged structures, in particular the deteriorating quality of concrete used. The refurbishment programme was even less cost effective than the construction of new IH blocks, considering that its useful life was only five years as compared to at least twenty years for new buildings. There were also safety considerations in favour of new blocks.

14. DS for H said in response that the proposal for high-rise IH was still under consideration by HA and the Administration, and a decision was expected in two months. Consideration would also be given to long-term solutions as suitable new sites were difficult to find. AD of H (O & R) added that the three refurbished old blocks referred to in paragraph 5 of the information note were safe for occupation although they would be used for about five years before demolition on account of their aged conditions.

15. On the schedule for clearance of all 19 THAs, DS for H advised that all THAs built before 1984 had been cleared while another six would be cleared by the end of 1997; the remaining ones would be cleared as soon as possible. The resultant THA sites would revert to permanent use as originally earmarked by the Planning Department and this might include public housing. He also confirmed in response to a member that the pilot scheme of the two low-rise prefabricated IH blocks would be evaluated. AD of H (O & R) added that all THAs would have been cleared by early 2000. The low-rise units totalling 984, at Sha Kok Mei and Long Bin, was a quick provision for coping with urgent needs for Squatter and THA clearees as a supplement to long-term arrangements. Although IH units were intended primarily for new clearees, AD of H (O & R) agreed to consider members’ suggestions for inviting licensees of the nearby THAs to apply.

V Financial backing for Sandwich Class Housing Scheme flats and sale price of Urban Improvement Scheme flats

(LegCo Paper No. CB(1) 1487/96-97(02) -- List of concerns raised by Hon LEE Wing-tat;

LegCo Paper No. CB(1) 1487/96-97(03) -- Response to Paper No. CB(1) 1487/96-97(02);

LegCo Paper No. CB(1) 1487/96-97(04) -- Information paper from the Administration on financial backing for Sandwich Class Housing Scheme flats; and

LegCo Paper No. CB(1) 1487/96-97(05) -- Information paper from the Administration on sale price of Urban Improvement Scheme flats)

Sale price of Urban Improvement Scheme flats

16. The Chairman disagreed with the sale of Urban Improvement Scheme (UIS) flats at full market price. Despite the grant of the sites to the Hong Kong Housing Society (HKHS) at a land premium equivalent to full market value, he questioned the justification for sale at full market price in the light of the sound overall financial position of HKHS. The Society had earned considerable profits from the sale of four Sandwich Class Housing Schemes (SCHS) and UIS flats, and had accumulated a surplus of over $3.5 billion in the last fiscal year. Small reductions in sale prices, which should be possible in view of the sound overall financial position, would meet a social aim of HKHS in taking care of the sandwich sector of the community. Some members supported this view, and commented that the full market price rendered the UIS a purely commercial project in an open market and brought HKHS to an equal footing with that of a private developer. In their opinion, this was not HKHS’s role and resources were not being used to cater to the intended clientele. A member expressed concern that selling UIS flats at full market value reinforced private developers’ efforts to uphold property prices. He asked whether the Administration could grant UIS sites to HKHS at discounted rates in line with sites for other subsidized housing projects.

17. A member further pointed out that only 4,122 flats were produced since introduction of the UIS in 1974 and the achievement was only very modest. He asked if the Administration had any plans to improve the contributions of the scheme. Another member suggested that consideration be given to discontinuing UIS, with resources and efforts concentrating on the sandwich class and other needy sectors.

18. DS for H said in response that HKHS was an independent, non-profit-making organization for supplementing the Government’s public housing programme. It had also complied with requests for assistance in undertaking small projects, such as housing schemes for the elderly. Its contribution was fully acknowledged. The future of UIS including possible improvements was at present under discussion with HKHS, and members’ views would be duly considered. Regarding the land premium for sites granted to HKHS, it was a fiscal policy of the Finance Branch, and the issue of UIS land premium had not been raised until now. He highlighted UIS’s primary purpose for improving the environment of older districts in urban areas.

19. The Executive Director, Hong Kong Housing Society (ED/HKHS) confirmed that UIS’s primary purpose was the improvement of the environment of old urban areas through the redevelopment of old buildings and the provision of recreational and social facilities such as public open spaces, nursery and day care centres for the elderly. Disincentives and risk factors were involved. The project "Jubilant Place", for example, took eight years to complete, of which five to six years were spent on acquisition, rehousing, resumption and clearance, and considerable effort and money were spent in negotiating claims and compensation and in maintaining buildings acquired pending development. Private developers were unlikely interested in undertaking redevelopment projects of the same nature. He stressed, moreover, that HKHS had a mix of development plans and housing schemes to cater to different sectors of the community, and, in fulfilling its role, it was always willing to accommodate government purposes in its projects, including Government Institution and Community provisions. More importantly, and unlike private developers, all surplus from development projects would be re-invested to subsidize or finance other public housing programmes, thus serving an even larger section of the community. Taking all these into consideration, and the payment of land premium at full market value, the pricing policy which was close to that of market price was reasonable. Having said this, ED/HKHS indicated HKHS’s readiness to consider adjustments in prices for HKHS tenants and eligible clearees affected by its redevelopment projects. Moreover, he pointed out that as a delivering agent for helping Government in meeting housing demands, it would be obliged to follow prevailing policies.

20. A member raised the problem of a sector of the sandwich class, whose household income fell between HA’s PRH ceiling and HKHS’s SCH base as regards eligibility for subsidized housing. Their only chance was to apply for HA’s Home Ownership Scheme (HOS) flats as "white-form" applicants whose success rate was 1:30, as compared to 1:7 for "green-form" applicants. He asked if HKHS could take care of this sector of the sandwich class. ED/HKHS said that this was a policy matter which would have to be considered by the Administration.

Financial backing for Sandwich Class Housing Scheme flats

21. The Chairman asked whether financial arrangements for SCHS purchasers could be further improved, quoting a less favourable mortgage rate for SCHS than HOS and difficulties in switching mortgages between banks. DS for H advised that the situation had changed as their prevailing rates no longer differed. ED/HKHS added that difficulties in switching mortgages between banks had now been resolved through improvements to documentation. Although banks generally tended to offer 100% mortgage to HOS/PSPS flat purchasers but only 80% to SCHS flat purchasers, not all needed the maximum mortgage limit. For example, only about 65% of the purchasers of Tivoli Garden opted for the maximum 80% mortgage.

VI Housing Ordinance (Amendment of Schedule) Order 1997

(LegCo Paper No. CB(1) 1487/96-97(06) -- Information paper from the Administration)

22. DS for H introduced the information paper on the Housing Ordinance (Amendment of Schedule) Order 1997, which related to the proposal for relaxing the resale restrictions of flats under HOS and the Private Sector Participation Scheme (PSPS).

23. The proposal followed a review of the resale restrictions by HA in April 1996 and entailed a reduced restriction period for resale, consequently increasing the turnover of HOS and PSPS flats to meet demand for subsidized home ownership flats, and making available PRH flats for reallocation to persons in genuine need. The Administration estimated that about 3,000 PRH flats would be generated for reallocation each year. Amendments to the Schedule to the Housing Ordinance (Cap 283) had accordingly been proposed to implement the proposal.

24. A member asked for the basis for reducing the period of ownership from five to three years and for the estimated turnover number of 3,000 flats per year. In reply, the Chief Housing Manager (Applications) (CHM(A)) said that the survey undertaken by HA in 1996 indicated that 24% of owners of HOS and PSPS in the five to 10 years’ ownership bracket had expressed a propensity to upgrade their properties if they could sell their flats in the open market. DS for H added that the period proposed would permit a reasonable resale of flats by owners, including "green-form" purchasers, who had the financial ability and the wish to do so. The proposal should not be seen as an effort to encourage resale, but a measure to facilitate resale where it was wanted. The consequential reallocation of PRH flats should also be welcomed.

25. Members were concerned about the stimulation of a secondary market for HOS and PSPS flats and its impact on the overheated property market in Hong Kong. A member enquired about how the "negotiated price" would be arrived at.

26. CHM(A) advised that relevant information including the purchase price and initial market value would be shown on the certificate permitting the resale. The discount rate and the premium to be inherited by the buyer would be worked out. On the basis of such information, the seller and the buyer would negotiate the price. DS for H said that there should be no scope for speculation given the built-in restrictive measures such as the requirement for buyers to have public housing tenant status. The Legal Adviser from the Housing Department added that transactions were subject to HA’s checking and confirmation, and that the buyer would have to give up his PRH flat or forfeit his right while waiting for allocation. Therefore, the buyers in the proposed secondary market should be genuine end users.

27. The Chairman advised that, at the House Committee meeting on 9 May 1997, members had decided to form a Subcommittee on the subsidiary legislation, and a meeting had been scheduled for 20 May 1997 at 2:30 pm. He hoped members would discuss the proposal in greater detail then.

VII Any other business

28. There being no other business, the meeting ended at 6:45 pm.

Legislative Council Secretariat
20 June 1997

Last Updated on 20 August 1998