Provisional Legislative Council

PLC Paper No. CB(1) 1196
(These minutes have been
seen by the Administration)

Ref : CB1/PL/HG/1

Panel on Housing
Minutes of special meeting held on Saturday, 14 February 1998, at 10:15 am 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 CHAN Choi-hi
Hon CHENG Kai-nam
Hon Kennedy WONG Ying-ho
Dr Hon Charles YEUNG Chun-kam

Members attending :

Dr Hon Raymond HO Chung-tai, JP
Hon LEE Kai-ming
Hon CHAN Wing-chan
Hon LO Suk-ching

Members absent :

Hon David CHU Yu-lin
Hon HO Sai-chu, JP
Hon Edward HO Sing-tin, JP
Hon Mrs Selina CHOW, JP
Hon Ronald ARCULLI, JP
Hon CHEUNG Hon-chung
Hon LEUNG Chun-ying, JP
Hon HUI Yin-fat, JP
Hon CHAN Kam-lam
Hon Andrew WONG Wang-fat, JP
Hon Bruce LIU Sing-lee
Hon LAU Kong-wah
Hon CHOY Kan-pui, JP
Dr Hon TANG Siu-tong, JP
Hon Timothy FOK Tsun-ting
Hon TAM Yiu-chung, JP

Public officers attending:

Mr Dominic S W WONG, JP
Secretary for Housing

Mr Andrew R Wells, JP
Deputy Secretary for Housing (2)

Chief Assistant Secretary for Housing

Clerk in attendance:

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

Staff in attendance :

Miss Becky YU
Senior Assistant Secretary (1)3

In the absence of a quorum at the beginning of the meeting, the Chairman declared that the meeting would proceed as an informal briefing. A quorum was subsequently reached at 10:30 am.

I White Paper on Long Term Housing Strategy

2. At the invitation of the Chairman, the Secretary for Housing (S for H) highlighted the key features of the White Paper on Long Term Housing Strategy, entitled "Homes for Hong Kong People into the 21st Century" Members then proceeded to the discussion session.

Chapter 1 -- Housing Demand

3. A member asked if the Housing Demand Model (HDM) would take into account population fluctuations, such as increase in the number of emigrants returning to Hong Kong, and in the number of Hong Kong residents moving to reside in Shenzhen as a result of the impending extension of service hours at Lo Wu Control Point. S for H explained that HDM was designed for strategic planning purposes. Any changes in key variables would be taken into account in assessing housing demand and hence in devising flat production targets.

4. As past experience showed that an under-estimation of population growth would give rise to serious shortfall in the supply of housing flats, a member asked if the Administration would consider increasing the safety margin to cater for a sudden surge in population growth. S for H assured members that the proposed safety margin of 6% would provide an adequate reserve. The Administration would update the projections by means of HDM on an annual basis or in the light of new statistical data. The projections had most recently been updated in late 1997 and no significant adjustments had been necessary.

5. On the operation of HDM, S for H advised that a description of the operation of HDM had been included in the report on assessment of housing demand published by the Working Group on Housing Demand in January 1997. A second report would be made available to members on 16 February 1998.

Chapter 2 -- Housing Supply: Sources and Constraints

6. In response to some members?concern about the possibility of achieving the target of annual provision of not less than 85,000 new flats, S for H explained that the Administration had introduced the following new measures:

  1. The housing development process had been simplified in respect of planning, land and environmental approvals and consent for building plans in private developments; and

  2. In the public sector, the Administration had also conducted a critical analysis of the development process of Housing Authority (HA) and Housing Society (HS), from availability of sites to completion of flats, with a view to improving the efficiency of the entire process, and had reduced the standard lead time for a housing project from 62 months to 47 months for HA and 52 to 46 months for HS.

Chapter 3 -- 13-year Flat Production Programme

7. Noting that the production figures for 1997/98 and 1998/99 would fall short of the annual production target of not less than 85,000 flats, a member enquired about the measures to be taken to ensure that the target could be met in subsequent years. S for H advised that the Administration had compiled an inventory of all housing sites for the period from 1997/98 to 2004/05 and had worked out for each year Control Lists indicating the number of flats to be produced from these sites. To ensure timely delivery of housing projects, a directorate officer would be nominated to oversee each of the approximately 940 housing sites (about 780,000 flats) in the eight-year flat production programme. While there would inevitably be annual fluctuations in the supply of flats over the years, S for H was confident that the annual production from 1999/2000 to 2000/04 would surpass the target of 85,000 flats.

Chapter 4 -- Private Sector

8. Members noted that of the 85,000 flats to be produced each year, 35,000 would be private housing flats. Having regard to the limited control over the private sector, they asked if the Administration would consider increasing the proportion of public housing flats to ensure sufficient supply to meet demand. S for H stressed that the target of constructing 85,000 flats a year, starting from 1999/2000 onwards, was a long-term objective. While the Administration was fully committed to building 50,000 flats each year in the public sector, the actual number of private housing flats produced in any particular year might vary, depending on market demand and commercial decisions taken by private developers. Nevertheless, the Administration was committed to providing a steady and sufficient supply of land for private development, streamlining and accelerating approval procedures, and maintaining sufficient labour supply for the construction industry in order to encourage the private sector to meet the production target.

9. A member expressed worries that property developers might procrastinate the production of flats in the event of poor market situation. For example, the supply of private housing flats in 1997/98 was expected to drop by 9,000 units after the recent financial turmoil. S for H advised that the actual shortfall had yet to be ascertained. The number of flats produced in 1997/98 and anticipated in the coming year would be published later.

Chapter 5 -- Drive for Home Ownership

10. As to how the Administration could achieve a home ownership rate of 70% by 2007 under the current weak economic condition and stringent mortgage requirements, S for H advised that apart from expanding the existing subsidized home ownership schemes, additional measures would be taken to help families in the lower and middle income groups to become home owners. These measures included offering all prospective public housing tenants the option of buying public flats at discounted prices; selling public rental flats to existing tenants at reasonable and affordable prices; allowing public housing tenants to buy Sandwich Class Housing (SCH) flats; and providing loans to first time home buyers. The Administration was confident that these measures would result in much wider home ownership in the community.

11. A member was of the view that chances for the sandwich class to acquire accommodation under the SCH programme would diminish if public housing tenants were allowed to buy SCH flats. S for H reaffirmed the Administration's commitment to addressing the housing needs of the sandwich class and advised that the total number of SCH flats would be increased from the current 30,000 to 50,000 flats by 2005. Additional funding had also been injected to SCH Loan Scheme to increase the number of beneficiaries. Furthermore, the introduction of the new Home Starter Loan Scheme would assist families to purchase their own homes in the private sector. S for H assured members that the Administration would constantly review the adequacy of SCH schemes, and if necessary, expand the schemes to meet increasing demand. As regards the priority in the allocation of SCH flats, S for H advised that applications from public housing tenants and sandwich class families living in the private sector would be treated equally as long as they met the eligibility criteria.

12. Some members expressed concern about the lack of measures to ensure the quality of flats, in particular for subsidized home ownership flats. S for H advised that to ensure quality, only contractors with ISO 9000 certificates had been eligible for inclusion in the contractor lists of HA and HS since 1992. For the private sector, property developers were well aware of the need to maintain a high standard of construction quality as this would directly affect the sale of flats. As such, an additional quality index was deemed not necessary.

Chapter 6 -- Public Rental Housing

13. In reply to a question on the average waiting time for public rental housing (PRH), S for H advised that the Administration had pledged to reduce this from the current six and a half years to under five by 2001, to four by 2003, and to three by 2005. To achieve this target, the Administration would increase the supply of new or refurbished flats to families on the Waiting List (WL) from an annual average of 14,000 to 20,000 flats beginning in 2000. Some members were not optimistic that the Administration could make available 20,000 PRH flats as pledged given the recent decrease in the ratio of Green Form applicants for allocation of Home Ownership Scheme (HOS), coupled with the transfer of new PRH flats for sale under HOS, both of which would reduce the number of vacated PRH flats. S for H advised that the Administration would address this concern by introducing measures such as giving first priority to Green Form applicants in flat selection under HOS; allowing public housing tenants to buy SCH flats; and providing loans to first time home buyers to encourage sitting tenants to become home owners. In addition, all prospective public housing tenants would be offered the option of buying public flats at discounted prices.

14. On the transfer of public housing tenancies, some members considered the restrictions on the grant of new public rental tenancies to family members of the deceased tenant unfair, in particular after the implementation of the Tenants Purchase Scheme, under which tenants would be exempted from such restrictions upon purchase of flats. S for H emphasized that as a matter of equity, public rental tenancies should not be allowed to be passed on from one generation to the next. As the number of beneficiaries under the Tenants Purchase Scheme would comprise only a small part of the overall PRH population, the Administration considered it inappropriate to violate the principle of allocating PRH based on genuine need.

15. As to whether the Administration would consider improving the space allocation standard for PRH tenants, S for H advised that eligible households should register on WL to seek relief from overcrowding. He added that the Administration did not rule out the possibility of improving the space allocation standard after all outstanding housing demands had been met. The space allocation standard had been progressively raised in the 1980s and 1990s and the prevailing practice of providing seven square metres per person was a major improvement.

Chapter 7 -- Groups in Special Need

16. In response to a question on squatters, S for H confirmed that only those satisfying the criteria set out in paragraph 7.9 of the White Paper would be cleared and re-housed as part of a district squatter clearance programme. Other squatters who wished to obtain PRH would be encouraged to register on WL or to purchase subsidized home ownership flats.

17. Owing to time constraints, members agreed that an additional meeting be held on Monday, 23 February 1998, at 4:30 pm to continue discussion on the White Paper.

18. There being no other business, the meeting ended at 11:30 am.

Provisional Legislative Council Secretariat
24 March 1998