LegCo Paper No. CB(1) 1169/96-97
(These minutes have been seen
by the Administration)
Ref : CB1/PL/HG/1, CB1/PL/PLW/1

LegCo Panel on Housing
LegCo Panel on Planning, Lands and Works

Minutes of joint meeting held on Friday, 24 January 1997, at 11:45 am in Conference Room B of the Legislative Council Building

Members present :

    LegCo Panel on Housing

    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 Fred LI Wah-ming
    Hon James TO Kun-sun*
    Dr Hon YEUNG Sum
    Hon CHAN Kam-lam
    Hon CHAN Yuen-han
    Hon CHEUNG Hon-chung
    Hon LEUNG Yiu-chung
    Hon Bruce LIU Sing-lee
    Hon SIN Chung-kai*

    LegCo Panel on Planning, Lands and Works

    Hon Edward S T HO, OBE, JP (Chairman)
    Dr Hon Samuel WONG Ping-wai, OBE, FEng, JP
    Hon NGAN Kam-chuen

Member attending :

    Hon Paul CHENG Ming-fun (Non-Panel Member)

Members absent :

    LegCo Panel on Housing

    Hon Ronald ARCULLI, OBE, JP*
    Hon CHEUNG Man-kwong
    Hon Zachary WONG Wai-yin
    Hon CHOY Kan-pui, JP*
    Hon Albert HO Chun-yan
    Hon LO Suk-ching

    LegCo Panel on Planning, Lands and Works

    Hon LAU Wong-fat, OBE, JP
    Hon IP Kwok-him
    Hon TSANG Kin-shing
    Dr Hon John TSE Wing-ling

* Also members of LegCo Panel on Planning, Lands and Works

Public officers attending :

    Housing Branch

    Mr D S W WONG, OBE, JP
    Secretary for Housing
    Mr A R Wells
    Deputy Secretary for Housing
    Miss Sandy CHAN
    Principal Assistant Secretary for Housing
    Miss L K LAM
    Chief Assistant Secretary for Housing

    Planning, Environmental and Lands Branch

    Mr C C F MAK, JP
    Deputy Secretary for Planning, Environmental and Lands

    Housing Department

    Mr J A Miller, JP
    Director of Housing

Clerk in attendance :

    Mrs Vivian KAM
    Chief Assistant Secretary (1)2

Staff in attendance :

    Miss Becky YU
    Senior Assistant Secretary (1)3

I.Election of Chairman

Hon LEE Wing-tat was elected Chairman of the joint meeting.

II Briefing on the Long Term Housing Strategy Review

2. Members were highly dissatisfied with the Administration’s failure to brief the Panels on the Consultative Document (CD) on Long Term Housing Strategy (LTHS) Review before the press conference; they questioned the rationale for such an arrangement. They reminded the Administration that the Executive was constitutionally accountable to the Legislature. While acknowledging the need to brief the Panels, the Secretary for Housing (S for H) said that he was willing and had proposed to brief the Panels in closed session before the press conference. The proposal was however declined by the Panel Chairman. S for H emphasized that the Administration had an obligation to announce such an important document to the public first. The Chairman explained that in accordance with Standing Order 60E(12), meetings of Panels should be held in public unless otherwise decided by the Panel. Furthermore, it was a common practice for the Administration to brief Panels in open meetings on related policy issues before press conferences as in the case of the Territorial Development Strategy Review (TDSR) and the policy document on Urban Renewal.

3. Dr Hon YEUNG Sum proposed and Hon SZETO Wah and Hon LEUNG Yiu-chung seconded the following motion:

"that the LegCo Panels on Housing, and Planning, Lands and Works regret the Secretary for Housing’s failure to brief the Panels on the Long Term Housing Strategy Review in an open session before the press conference."

The motion was unanimously passed by members present at the meeting. The Chairman instructed that the motion be conveyed to the Administration.

(Post-meeting note: A letter to the Administration on the motion was issued on 24 January 1997)

Briefing by the Secretary for Housing

4. At the invitation of the Chairman, S for H briefly introduced the Consultative Document. He said that the main objective of the LTHS Review was to identify any changes in policies or priorities necessary to achieve the Government’s housing goals of: helping all households to gain access to adequate and affordable housing; and encouraging home ownership in the community, having regard to the changing needs and expectations of the community, as well as the forecast demand for housing over the period up to March 2006. While significant achievements had been made over the past ten years in the provision of modern public rental housing (PRH) for nearly 400,000 households or over 20% of the population in Hong Kong, and in increasing home ownership rate to 50%, the Administration had been less successful in securing the fullest possible contribution by the private sector towards meeting housing demand, and a fair and efficient allocation of the considerable public resources committed to the PRH programme. As a result, home ownership was beyond the reach of many families; the waiting time for PRH was still long; and the public sector’s share of housing market continued to grow. To tackle these challenges, the Administration proposed that future housing priorities should be focused on: increasing flat supply; maximizing the contribution of the private sector; encouraging wider home ownership; and providing PRH to those in genuine need. S for H then briefed members on the improvements and new initiatives which would help achieve these goals.

Increasing flat supply

5. S for H said that based on the latest forecast on housing demand, an average of about 80,000 new flats would be required annually during the planning period from April 1995 to March 2006: some 85,000 flats for the first period 1995/96 to 2000/01, and 73,000 flats for the second period 2000/01 to 2005/06. Regular updating would be conducted to take account of such results as the 1996 Population By-census, and the study on housing aspiration commissioned by the Planning Department (PD). To ensure an adequate supply of flats to meet forecast demand, efforts would be made to increase the supply of land and infrastructure; streamline and expedite procedures for the approval of housing projects and related transactions; facilitate the urban renewal process; and monitor the capacity of the construction industry. S for H supplemented that while sufficient land had been allocated or identified to meet the announced annual production target of about 85,200 flats for both public and private housing for the first period, the Administration planned to meet the flat production requirement of 78,000 flats for the second period as reflected in the TDSR through the development of reserved sites on current plans; public and private redevelopment of existing sites; accelerated development of new strategic growth areas; and rezoning of development pending results of detailed feasibility studies. Such a flat production requirement would provide a safety margin of about 7% over the forecast requirement.

Maximizing the contribution of the private sector

6. While acknowledging the need to assist and encourage private sector investment in housing as narrowing the gap between supply and demand would relieve pressure on domestic property prices, S for H emphasized that the Administration fully subscribed to a free private housing market, subject to the necessary regulations for ensuring adequate consumer protection, and to the level and timing of supply of private flats be decided by the market. To encourage investment in private housing, efforts would be made to ease supply constraints as far as possible, in particular on land and labour. Consideration would also be given to invite private developers to provide a suitable proportion of Private Sector Participation Scheme flats by way of "mixed developments", pending results of a detailed feasibility study and a pilot scheme to be launched.

Encouraging home ownership

7. S for H said that the Administration would maintain, and subject to resources, expand the well-established subsidized home ownership programmes to help middle and low income families to acquire their own homes. A key priority would be to encourage more PRH tenants to become home owners as this would help to provide greater financial security, and release rental flats for re-allocation to families in greater need for PRH. To this end, the Administration proposed to allow: PRH tenants to buy Sandwich Class Housing flats on equal terms with families in private housing, or existing rental flats at affordable prices; and public and qualified prospective PRH tenants to buy new flats originally earmarked for rental purpose.

Providing public rental housing to those in genuine need

8. S for H emphasized that as a matter of equity, the Administration must ensure that those who received PRH were in genuine need. Otherwise, an unfair and increasing burden would fall upon the general community, and those in genuine need would have to wait long for assistance. To this end, the Administration proposed to require all prospective tenants to undergo a comprehensive means test, covering both income and net assets, before allocation of PRH flats; and introduce similar restrictions on the ability to "take over" public rental tenancies. Adult family members of deceased tenants, excluding surviving spouses, would be required to undergo a comprehensive means test before the grant of new tenancies. Those who failed the means test would be allowed to remain temporarily as tenants, subject to the charging of market rent. S for H also stressed the need for PRH tenants to make a fair contribution towards the full cost of the accommodation provided on the basis of affordability. Accordingly, the Administration had proposed to gradually increase public housing rents to achieve the median rent-to-income ratios (MRIRs) of 15% or 18.5% by the year 2006. However, PRH tenants facing genuine financial hardship could seek temporary rent relief through the Rent Assistance Scheme.

9. S for H supplemented that apart from the four housing schemes for the elderly, the Administration proposed to provide suitable small sites to the Hong Kong Housing Society for the construction of affordable housing for sale or rent to eligible elderly persons; and increase the supply of small PRH flats for allocation to eligible single persons to meet the needs of these vulnerable groups.

The way forward

10. S for H advised that the Administration would establish an advisory committee comprising mainly non-official members to monitor and advise where necessary the Secretary for Housing on adjustments to the new LTHS. The Administration would also brief District Boards, relevant advisory and professional bodies such as the Lands and Buildings Advisory Committee in the coming weeks. Subject to public opinions collated during the consultation period which would run until the end of May 1997, the Administration would take final decisions and publish a White Paper on LTHS later in the year.

Discussion session

General policy

11. Some members commented that recommendations in the CD were too conservative and represented a retrograde step in housing policy. They also asked if the Administration was dissatisfied with the existing policies of the Housing Authority (HA) given the extent of coverage on the latter in the CD. S for H reiterated that the aim of the LTHS Review was to identify any changes in policies and priorities necessary to achieve the housing goals. The CD was intended to be strategic in nature and the recommendations contained therein were only preliminary proposals which would require further discussions with the HA, the Housing Society and relevant government departments, having regard to public opinions expressed during the consultation period. He assured members that HA would be accorded flexibility to devise its own policies within the overall housing framework.

Chapter 3 Increasing flat supply

12. Judging from past experience, members were not optimistic that the Administration could achieve its annual production targets of 85,000 and 78,000 flats for the periods 1995/96 to 2000/01 and 2000/01 to 2005/06 respectively. They urged the Administration to devise a planning framework within which land and infrastructure would be provided to meet housing demand. A member considered it useful for the Administration to provide information on the geographical distribution of the 85,000 and 78,000 flats. In response, S for H reiterated that sufficient land for the first planning period had been allocated or identified to meet the production target. For the second period, the Administration planned to meet the flat requirement through the development of reserved sites on current plans; public and private redevelopment of existing sites; accelerated development of new strategic growth areas; and rezoning of development. The Deputy Secretary for Planning, Environmental and Lands (DS for PEL) supplemented that the Administration was committed to providing a steady and sufficient supply of serviced land for housing. Steps were being taken to expedite planning and development of such areas as the airport at Kai Tak, the remaining phases at Tung Chung new town, Phase 3 of Tseung Kwan O new town, and the West Kowloon Reclamation. The Administration would also examine the feasibility of re-zoning land in selected locations previously designated for industrial use in the light of reviews on future development of industries in Hong Kong; identifying potential new development sites on the periphery of planned or developed urban areas to which new roads and infrastructure could be extended; up-zoning selected areas to increase densities of development in locations where spare infrastructural capacity was available; and identifying infill sites within comprehensively designed areas where there had been a fall in population and where existing community services and infrastructure systems had spare capacity.

13. As regards the private sector, DS for PEL advised that the Administration recognized the important role of the private sector in meeting the housing need of the community, and was committed to providing an adequate and steady supply of new land and supporting infrastructure to meet the demand for private housing. By way of illustration, about 134 hectares of land had been allocated to the private sector by the Land Commission during the past five years and a further allocation of 248 hectares was expected over the next five years. This would represent a 80% increase in land supply for private housing. DS for PEL supplemented that the discrepancy between the estimated and actual supply of private housing flats over the past few years was attributed to the lead time of three to four years for construction of flats, and that the supply of flats would be substantially increased at the later stage. He was confident that the production targets of some 22,000 and 36,000 units for the fiscal years 1997 and 1998 respectively could be met. The Administration hoped that the improvements in land supply and market conditions would serve as incentives to encourage the private sector in meeting private housing demand.

14. Some members were concerned that private housing demand would rise consequent upon hoarding of flats by property developers; they sought clarification on the means by which the gap between supply and demand in the private sector could be narrowed. S for H advised that while there were no significant signs of hoarding of flats as suggested by members, the Housing Branch would monitor the private sector market closely and provide advice to the PEL Branch on taking appropriate actions such as the imposition of additional conditions in the building covenants to curb unsatisfactory trade practices.

15. A member expressed disappointment at the absence of specific policies on legal immigrants from China given the large number of such immigrants entering Hong Kong each year. S for H advised that the Administration had taken into account the projected number of these immigrants in forecasting the overall housing demand. Nevertheless, legal immigrants were required to satisfy the seven-year residence rule before they would become eligible for public housing. He emphasized that no one would be rendered homeless in Hong Kong, and that interim housing would be offered to those immigrants in genuine need but were not immediately eligible for public housing. S for H added that the Administration had no intention of changing the seven-year residence rule as this was essential to ensure that the scarce housing resources in Hong Kong would be allocated to meet the needs of permanent residents as a matter of priority.

Chapter 5 Encouraging wider home ownership

16. A member said that the position of the Democratic Party was that the Government’s share of the housing market would be diminished as a result of the home ownership-led approach, and that the role of the private sector would rise consequently. One member considered that the success of such an approach would hinge on the economic situation of Hong Kong; he cautioned that home owners would be heavily indebted in the event of recession as was the case in the United Kingdom and the United States. Another member was concerned that the home ownership-led approach would further aggravate the disparity of wealth in Hong Kong. An example would be the transfer of new rental blocks earmarked as reception estates for displaced tenants under the Comprehensive Redevelopment Programme to Home Ownership Scheme (HOS) flats. Hon Edward S T HO however took a different view and said that the Liberal Party was in support of the Administration’s direction in encouraging wider home ownership in the community. S for H emphasized that it remained the Administration’s objective to provide adequate and affordable housing to those in genuine need. The transfer of new PRH blocks to HOS had been approved by the HA with a view to meeting unsatisfied demand for home ownership without affecting the re-housing opportunities of households awaiting allocation of PRH flats.

17. A member enquired if the Administration had conducted a financial analysis on the revenues to be generated in the event of success of the subsidized home ownership schemes outlined in Chapter 5. S for H emphasized that the CD was intended to be strategic in nature, and many of the operational details as well as the financial implications had yet to be worked out. He assured the meeting that the revenue so generated would be used to finance future housing projects.

Chapter 6 Providing public rental housing for those in need

18. Some members considered the proposed requirement in paragraph 6.15 for adult family members of deceased principal tenants of PRH flats to undergo a comprehensive means test before the grant of new tenancies a drastic change to the existing housing policy. S for H reiterated that the Administration was committed to providing adequate housing for households in genuine need. Those who were not in immediate need would be encouraged to acquire their own homes.

19. Members were worried that PRH tenants, in particular those in older estates, would suffer from exorbitant rent increases in the event the median rent-to-income ratios (MRIRs) were to rise from the current average of 9% to 15% and 18.5% as outlined in the CD; they asked for illustrations on the anticipated rent increases up to 2006 for one or two PRH estates, which would enable the Administration to achieve the target ratios. S for H stressed that rents for existing PRH estates would be progressively increased to achieve MRIRs of 15% and 18.5%. However, tenants facing genuine financial hardship could seek temporary assistance through the Rent Assistance Scheme. The Director of Housing supplemented that the MRIRs referred to were the prevailing rent-setting criteria adopted by HA, and that tenants’ affordability would remain the prime consideration when determining the levels of rents for different types of PRH estates. Other factors such as the comparable estate values and the location of estates would also be taken into consideration. Furthermore, the impact of rent increases in older PRH estates would become less significant as most of these estates would be demolished by the year 2006.

20. In response to a member, S for H advised that the average waiting time would be shortened if such recommendations in the CD as the increase in public housing supply and the implementation of a more equitable system of allocation of PRH could be achieved.

III Any other business

21. There being no other business, the meeting closed at 1:30 pm.

Legislative Council Secretariat
2 April 1997

Last Updated on 20 August 1998