Provisional Legislative Council

PLC Paper No. CB(1) 1217
(These minutes have been
seen by the Administration)

Ref : CB1/PL/HG/1

Panel on Housing
Minutes of meeting held on Tuesday, 10 February 1998, at 2:30 pm in the Chamber of the Legislative Council Building

Members present :

Hon CHAN Yuen-han (Chairman)
Hon Frederick FUNG Kin-kee (Deputy Chairman)
Hon WONG Siu-yee
Hon David CHU Yu-lin
Hon HO Sai-chu, JP
Hon Mrs Selina CHOW, JP
Hon Ronald ARCULLI, JP
Hon CHAN Choi-hi
Hon CHAN Kam-lam
Hon CHENG Kai-nam
Hon Andrew WONG Wang-fat, JP
Dr Hon Charles YEUNG Chun-kam
Hon LAU Kong-wah
Hon CHOY Kan-pui, JP
Dr Hon TANG Siu-tong, JP
Hon Timothy FOK Tsun-ting

Members absent :

Hon Edward HO Sing-tin, JP
Hon CHEUNG Hon-chung
Hon LEUNG Chun-ying, JP
Hon HUI Yin-fat, JP
Hon Kennedy WONG Ying-ho
Hon Bruce LIU Sing-lee
Hon TAM Yiu-chung, JP

Public officers attending :

For item IV

Housing Bureau

Miss Sandy CHAN
Principal Assistant Secretary for Housing (2)

Housing Department

Assistant Director (Commercial Properties)

Chief Estate Surveyor (Commercial Properties)

For item V

Housing Bureau

Miss Sandy CHAN
Principal Assistant Secretary for Housing (2)

Principal Assistant Secretary for Housing (Housing Strategy)

Housing Department

Business Director/Allocation & Marketing

Senior Housing Manager/Sale of Rental Flat

Clerk in attendance :

Ms LEUNG Siu-kum
Chief Assistant Secretary (1)2

Staff in attendance :

Miss Becky YU
Senior Assistant Secretary (1)3

I Confirmation of minutes of previous meetings
(PLC Paper Nos. CB(1) 881 and 886)

The minutes of the meetings held on 11 and 24 December 1997 were confirmed.

II Date of next meeting and items for discussion

Special meeting on 14 February 1998

2. Members agreed to hold a special meeting on Saturday, 14 February 1998, at 10:15 am to receive a briefing by the Administration on the White Paper on Long Term Housing Strategy.

Meeting on 16 March 1998

3. The next regular meeting would be held on Monday, 16 March 1998, at 2:30 pm to continue discussion on the "White Paper on Long Term Housing Strategy Review" and "Recommendations for improvement to prevent a re-occurrence of the incident of fallen glass panel in Ping Tin Shopping Centre"

(Post-meeting note: Issues related to the White Paper on Long Term Housing Strategy Review were discussed at the special meeting on Monday, 23 February 1998, at 4:30 pm. In view of the far-reaching implications of the Tenants Purchase Scheme, members agreed to advance the next meeting from 16 March 1998 to Thursday, 12 March 1998, at 8:30 am to discuss the Scheme. The subject on "Recommendations for improvement to prevent a re-occurrence of the incident of fallen glass panel in Ping Tin Shopping Centre" was postponed to the special meeting scheduled for Thursday, 26 March 1998, at 2:30 pm. Two additional items on "Mortgage problem of Sandwich Class Housing Scheme flats" and "Housing provision for elderly persons" were subsequently included for discussion at the meeting on 26 March 1998.)

III Information paper issued since last meeting

4. Members noted that no information papers had been issued since last meeting.

IV Rent policy and redevelopment assistance for tenants of factory estates built by former Resettlement Department
(PLC Paper No. CB(1) 281(02), 656 and 887(01))

5. Having regard to the recent economic downturn, the Chairman asked if the Administration would consider freezing the rents for flatted factory estates as was the case with the commercial units in shopping centres managed by the Housing Authority (HA). The Assistant Director (Commercial Properties) (AD/CP) explained that of the 16 flatted factory estates in Hong Kong, seven were built between 1959 and 1973 by the then Resettlement Department as part of the resettlement programme to reprovision squatter factories and cottage workshops. Rents for these factory units were originally fixed by reference to the Schedule in the now repealed Resettlement Ordinance. The management of these factory estates was taken over by HA on 1 April 1973. In the light of rising management and maintenance costs, HA introduced biennial rent reviews to the schedule rents in August 1977, under which a flat rate increase of 25% was imposed every two years. Nevertheless, the adjusted rents should not exceed 80% of the estimated full market rents of the same year. Given the low initial rent levels in the Schedule and the prescribed ceiling, rents for flatted factory premises were well below the market levels. By way of illustration, the existing rents for these factory units ranged from 28% to 76.8% of the market rents. On the suggestion of freezing rent increases for flatted factory premises, AD/CP undertook to relay members?views to the Commercial Properties Committee of HA for consideration.

6. In view of the declining need for factory buildings as a result of massive relocation of manufacturing processes to Southern China, some members enquired about the possibility of redeveloping old flatted factory estates for residential use. AD/CP advised that the proposal had been included in the context of the Long Term Housing Strategy Review. In fact, HA had set up a working group to study the feasibility of redeveloping its factory estate sites for residential purpose. The development potential of each site would be determined individually taking into account aspirations of tenants concerned, environmental constraints, building capacity and economic returns. The study was expected to be completed in 1998 and a final report would be submitted for approval by the Commercial Properties Committee of HA.

7. As regards compensation for tenants affected by redevelopment, AD/CP advised that although tenants concerned were not eligible for compensation under the terms of tenancy agreements or the Housing Ordinance, it was HA's practice to pay an ex-gratia allowance and to provide opportunities for relocation with a view to assisting these tenants to re-establish their businesses. According to the experience gained in the redevelopment of Yuen Long Factory Estate, the offer of cash payment in lieu of reprovisioning was particularly well accepted by tenants. Some members remarked that HA might need to review the adequacy of the ex-gratia allowances as this was crucial to the expeditious clearance of the remaining flatted factory estates.

V Problems arising from the introduction of the Tenants Purchase Scheme
(PLC Paper Nos. CB(1) 887(02) and (03))

Rescission cases resulting from families switching from Home Ownership Scheme (HOS) to Tenants Purchase Scheme (TPS)

8. Members were concerned about the arrangement to refund HOS deposits to tenants of TPS Phase I estates who had not yet completed the assignments for HOS flats. They considered that the Administration should also take into account those Green Form buyers whose public rental housing (PRH) flats would most likely be included in the subsequent phases of TPS. Mr Frederick FUNG added that it was an administrative decision that the six estates were selected for sale under TPS Phase I. As a matter of equity, HA should allow tenants living in Trident blocks and rental blocks of five to twelve years old, which were the targets of TPS, to rescind from HOS and get back the deposits. In reply, the Business Director/Allocation & Marketing (BD/A&M) stressed that the refund of HOS deposits was an exceptional arrangement to take account of the fact that TPS was a new scheme, and that tenants concerned were not aware of the alternative of buying their own PRH flats when they purchased HOS flats. As such, the arrangement to refund HOS deposits would only apply to TPS Phase I tenants. He nevertheless undertook to relay members?views to the Home Ownership Committee of HA for consideration.Admin

9. To avoid future confusion, Mr CHENG Kai-nam urged HA to announce as soon as possible the names of all TPS estates and the relevant sale schedule so that tenants concerned could make an early decision. Mr CHAN Kam-lam supplemented that consideration should be given to include other type and age of PRH estates under TPS and to shorten the sale period of ten years for 250,000 TPS flats in the event of good response. While appreciating members?concerns, the Principal Assistant Secretary for Housing (Housing Strategy) (PAS for H (HS)) emphasized the need for HA to check and to undertake essential renovation works on all selected TPS estates before these were put up for sale to ensure good conditions. It also took time for the Legal Advisory and Conveyancing Office of the Lands Department to prepare the Deed of Mutual Covenant (DMC) for each TPS estate. PAS for H (HS) assured members that HA would review TPS in the light of the experience gained in Phase I. Relevant issues would be examined with a view to devising a more comprehensive programme for future phases of TPS. BD/A&M reiterated that the Administration had no intention to force tenants to buy TPS flats and the status of those refused to buy TPS flats would remain unchanged.

Review of HOS

10. Some members showed concern about the differentiation between HOS and TPS flats, in particular after the transfer of PRH blocks to HOS for sale. PAS for H (HS) took note of members?concern and advised that HA would conduct a comprehensive review on HOS, including the ratio between Green Form and White Form applicants, pricing strategy, design, quality and facilities in the light of the review on TPS with a view to re-defining the respective roles of HOS and TPS in the overall housing provision in Hong Kong. As regards the transfer blocks, BD/A&M explained that these were new PRH blocks not earmarked for letting purpose, such as those redeveloped blocks. At members?request, BD/A&M undertook to provide the names of the 44 PRH blocks which had been transferred for sale under HOS.Admin

11. Referring to the motion on Improving the Home Ownership Scheme passed by the Provisional Legislative Council on 7 January 1998, Mr CHENG asked if HA would consider the recommendation of allowing HOS owners to sell their flats in the HOS secondary market for the purpose of buying another larger HOS flat. BD/A&M cautioned that the proposal on relaxing the policy might deprive the opportunity of those who had never enjoyed the benefit of subsidized home ownership schemes of acquiring a flat in the HOS secondary market. He nevertheless advised that the Home Ownership Committee of HA would discuss Mr CHENG's motion at its meeting in March 1998. While acknowledging the Administration's concern, Mr CHENG considered that the impact of the proposal would be minimal given the current inactive HOS secondary market.

Sale prices

12. A member expressed concern about the pricing strategy for TPS, under which the sale prices of TPS flats located on the same floor differed significantly. BD/A&M explained that the prices of these flats were determined by surveyors of the Housing Department taking into account the saleable area, age, location and other relevant factors. This was also consistent with the pricing strategy for HOS. He added that tenants who had doubt about the price of their flats could request for a re-assessment. As to whether HA would consider compiling a price list of all TPS flats to enhance transparency, the Senior Housing Manager/Sale of Rental Flat (SHM/SRF) considered it inappropriate to disclose the sale price of a TPS flat to persons other than the sitting tenant who was the only eligible buyer of the flat. Nevertheless, a price list of all vacant flats within an estate would be made available for inspection in the relevant estate office.

Method of financing

13. SHM/SRF advised that it was the Administration's intention to provide favourable mortgage terms to TPS tenants, subject to the agreement of financial institutions. The prevailing interest rate for TPS was comparable with that of HOS.

Building management

14. In reply to a question on management of TPS estates, BD/A&M advised that HA would, in collaboration with the Home Affairs Department, help TPS owners to form Owners Corporation (OC) in accordance with the provisions under DMCs being prepared. The basic principles would be similar to that of HOS estates. TPS purchasers had already been informed of the salient points of the DMC through the sales materials given to them in the initial invitations to purchase. As regards the relationship between OCs and the existing Mutual Aid Committees or Estate Management Advisory Committees, BD/A&M advised that consideration was being given to amalgamate these organizations to enhance efficient management.


15. While some members remained of the view that apart from TPS tenants, HA should refund HOS deposits to other Green Form buyers who had not yet completed the assignments for HOS flats upon rescission, others were concerned about the large number of over 20,000 buyers involved and considered that the problem should be examined in the context of the comprehensive review of the policies on HOS and TPS taking into account the grievances of affected Green Form buyers and views expressed by members. PAS for H (HS) assured members that their views, including those related to HOS, would be considered in the context of the review on TPS which was expected to be completed in mid-1998. In view of the far-reaching implications of TPS, members requested and the Administration undertook to report to the Panel progress of the review at a special meeting scheduled for Thursday, 26 March 1998, at 2:30 pm.

VI Any other business

16. There bring no other business, the meeting ended at 4:30 pm.

Provisional Legislative Council Secretariat
27 March 1998