Provisional Legislative Council

PLC Paper No. CB(1) 1382
(These minutes have been seen
by the Administration)

Ref : CB1/PL/HG/1

Minutes of special meeting held on Thursday, 26 March 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 HO Sai-chu, JP
Hon Edward HO Sing-tin, JP
Hon Mrs Selina CHOW, JP
Hon LEUNG Chun-ying, JP
Hon HUI Yin-fat, JP
Hon CHAN Kam-lam
Hon CHENG Kai-nam
Hon Andrew WONG Wang-fat, JP
Hon Kennedy WONG Ying-ho
Dr Hon Charles YEUNG Chun-kam
Hon Bruce LIU Sing-lee
Hon CHOY Kan-pui, JP
Hon TAM Yiu-chung, JP

Members absent :

Hon WONG Siu-yee
Hon David CHU Yu-lin
Hon Ronald ARCULLI, JP
Hon CHEUNG Hon-chung
Hon CHAN Choi-hi
Hon LAU Kong-wah
Dr Hon TANG Siu-tong, JP
Hon Timothy FOK Tsun-ting

Public officers attending :

For item III

Housing Bureau

Deputy Secretary (1)

Ms Sandy CHAN,
Principal Assistant Secretary (2)

For item IV

Housing Bureau

Ms Sandy CHAN,
Principal Assistant Secretary (2)

Assistant Director/Applications & Home Ownership

For item V

Housing Bureau

Ms Sandy CHAN,
Principal Assistant Secretary (2)

Housing Department

Mr Raymond Bates, JP,
Business Director (Commercial & Services)

Attendance by invitation :

For item III

The Concern Group on the Rights of Prospective Owners of Sandwich Class Housing Flats

Ms YAN Shiu-man, Yolanda
Mr LO Yin
Mr WONG Chi-leung
Mr FUNG Ka-cheong
Ms YEUNG Wai-man

Hong Kong Housing Society

Mr Victor SO
Executive Director

Mr Francis LAW
Director (Planning & Development)

For item IV

The Joint District Association to Fight for Addition of Family Members to Public Rental Tenancies of Single Elderly Tenants
Mr LI Ying-kuen
Mr LEE Ming
Mr LAM Fong

Hong Kong Housing Society

Mr Victor SO, Executive Director

Mr Francis LAW, Director (Planning & Development)

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 meeting
(PLC Paper No. CB(1) 1196)

The minutes of the meeting held on 14 February 1998 were confirmed.

II Date of next meeting and items for discussion

2. The agenda for the special meeting on Monday, 30 March 1998 circulated vide PLC Paper No. CB(1) 1203(01) was confirmed. To allow sufficient time for discussion, members agreed to advance the meeting from 10:45 am to 9:30 am.

III Mortgage problem of Sandwich Class Housing Scheme flats

Meeting with the Concern Group on the Rights of Prospective Owners of Sandwich Class Housing Flats
(PLC Paper No. CB(1) 1203(2))

3. At the invitation of the Chairman, Ms YAN Shiu-man highlighted the salient points in the submission. Ms YAN acknowledged that under the Housing Society's (HS) guarantee, arrangements had been made with six banks so far to offer mortgage loans up to 80% of the selling price of the Sandwich Class Housing Scheme (SCHS) flats to buyers of SCHS projects. She however pointed out that some buyers still found it difficult to obtain mortgage loans up to 80% of the selling price of the SCHS flats from banks since the monthly repayment as a result of the sharp rise in mortgage interest rate after the recent financial turmoil had exceeded half of their household income. Moreover, certain banks had imposed a quota on SCHS mortgage applications. On the arrangement for HS to help SCHS buyers to pay the interest in excess of the prime rate for the first three years, Ms YAN welcomed the move but did not agree that SCHS buyers should take on the mortgage interest rate charged by the bank first and claim the portion in excess of the prime rate from HS afterwards as suggested by some banks since this might have an adverse effect on their salaries tax assessment and mortgage interest deduction. Ms YAN was of the view that the best way to assist SCHS buyers would be for HS to provide a 100% default guarantee, modelled after the Home Ownership Scheme (HOS), to minimize the risk of banking institutions so that they would be willing to provide adequate mortgage at a lower interest rate to SCHS purchasers. She also urged HS to consider allowing those SCHS buyers who were not able to obtain mortgage loans to get back their full or partial deposits upon rescission.

Meeting with the Administration
(PLC Paper No. CB(1) 1203(03))

4.Some members cautioned that group rescission would take place if buyers in the six pre-sold SCHS projects were not able to obtain mortgage loans from banking institutions. The Executive Director/HS (ED/HS) responded that HS noted the difficulties experienced by some purchasers in obtaining mortgage loans after the downturn of the property market in recent months. Measures which included sharing banks' losses in default cases within the first five years and compensating the banks for the difference in interest income should they charge SCHS buyers only the prime rate instead of the best mortgage interest rate for the first three years would be adopted to encourage banks to provide adequate mortgage to purchasers. The compensation alone would cost HS $600 million. At members' request, the Deputy Secretary for Housing (DS for H) undertook to consider reviewing the five-year non-property ownership period to see whether buyers who rescinded purchases could acquire another SCHS flat in the near future. As regards the refund of deposits, ED/HS advised that as there was no current policy in this respect, HS would consider each case according to individual circumstances. Admin

5. A member asked if the provision of mortgages up to 80% of the selling price of properties by banks was subject to the limit of monthly mortgage instalments not exceeding half of the buyers' household income. ED/HS explained that the 50% benchmark was only a guideline set by the Hong Kong Monetary Authority and banking institutions had full discretion to decide whether this should be adhered to. Regarding the quota on SCHS mortgage applications, ED/HS considered it unusual for large banks to impose a quota on mortgage applications. Nevertheless, HS would provide information to SCHS buyers in future on the banks which had such a quota in place and those which did not. As to whether HS would consider providing a 100% default guarantee for SCHS projects, ED/HS advised that this was not possible since HS was a self-financed organization and the current arrangement to help SCHS buyers had already created a contingent liability of $4.3 billion to HS.

6. In view of the fact that the rise in mortgage interest rate from the prime rate plus 0.5% in 1997 to the present prime rate plus 1.5% had increased the financial burden on SCHS buyers, and that both HOS and SCHS were subsidized home ownership schemes and subject to a payment of premium upon resale of flats, some members considered that the preferential mortgage interest rate offered to HOS purchasers should similarly apply to SCHS buyers. ED/HS clarified that the low mortgage interest rate in 1997 was a result of the good liquidity and keen competition among banks. He assured members that continued efforts would be made by HS to encourage banking institutions to offer more favourable interest rate to SCHS buyers. However, the actual interest rate would be determined by individual banks. DS for H supplemented that the difference in mortgage interest subsidy for HOS and SCHS purchasers was to take account of their different household income limits. This was consistent with the Home Starter Loan Scheme, under which applicants from different income groups would be subject to different loan interest rates. In the wake of the recent economic downturn, members were of the view that extra efforts, such as extending the mortgage period, should be made by HS to assist SCHS buyers who were experiencing financial hardship.

7. A member asked if HS would inform buyers of the assessed market value of SCHS flats beforehand so that they were aware of the amount of premium for resale. ED/HS assured the member that both the assessed full market value computed by the Rating and Valuation Department and the discount rate for individual SCHS flats would be made available for purchasers' information before flat selection and signing of the Provisional Sale and Purchase Agreement.

IV Housing provision for elderly persons

Meeting with the Joint District Association to Fight for Addition of Family Members to Public Rental Tenancies of Single Elderly Tenants
(PLC Paper No. CB(1) 1203(04))

8. The deputation was aggrieved at the existing housing policy on addition of family members, under which the adult children of single elderly tenants were prohibited from inclusion in the public rental housing (PRH) tenancies while the spouse of one of the tenant's married children was allowed to be added to the tenancy. They also expressed grave concern on the grant of temporary stay permits to adult children of single elderly tenants since the renewal of these permits was at the discretion of the Housing Department (HD) and had generated a sense of insecurity among the elderly tenants. In view of the Chief Executive (CE)'s pledge to care for the elderly, the deputation urged the Administration to review the prevailing housing policy to allow the addition of adult children of single elderly tenants to PRH tenancies so that they could take care of their elderly parents.

Meeting with the Administration
(PLC Paper No. CB(1) 1203(05))

9. The Principal Assistant Secretary for Housing (PAS for H) emphasized that the Administration was committed to achieving CE's pledge to care for the elderly. In the housing aspect, the Administration had implemented a number of housing schemes, under which public housing was provided for the elderly on a priority basis. These included the Single Elderly Persons Priority Scheme, Elderly Persons Priority Scheme, Families with Priority Scheme for Families with Elderly Persons and Special Scheme for Families with Elderly Persons. Under normal circumstances, eligible applicants under these schemes could have their waiting time shortened or enjoy special allocation arrangements. PAS for H cautioned that if adult children were allowed to be included in the tenancy, their spouse and children might eventually be added to the tenancy too. This would result in queue jumping. Some members were not convinced of the Administration's explanation. They considered that the prevailing policy on addition of adult children to PRH tenancies was inconsistent with other housing policies for the elderly which aimed to provide priority care to them. A member cited an example to illustrate such an inconsistency that under the Tenants Purchase Scheme, elderly tenants were also allowed to add an adult family member to the deed.

10. Some members urged HD to adopt a more flexible approach in dealing with applications for addition of adult children from single elderly tenants, in particular those elderly tenants sharing the same PRH flat with other tenants and living with adult children coming from the Mainland. The Assistant Director/Applications & Home Ownership (AD/A&HO) advised that although addition of adult children to PRH tenancies was not normally allowed, requests under special circumstances would be considered on individual merits taking into consideration the justifications given, the circumstances of the person to be added and those of the applicants. Tenants concerned might seek relief if the inclusion resulted in overcrowded condition. However, re-allocation to another PRH flat would be subject to the availability of housing resources. In the event that permanent addition was considered not desirable, a temporary stay permit of six months would be granted to the adult children of elderly tenants. Further renewal of the permit would be subject to review upon its expiry. As to whether HD would consider granting permanent addition to the tenancy after several extensions, AD/A&HO confirmed that this was possible if circumstances so required. Members in general considered that the criteria for granting permanent and temporary stay permits were unclear. They urged the Administration to consolidate a consistent policy in this respect. To facilitate a better understanding, the Administration was requested to provide information on the number of permanent stay and temporary stay granted over the past two years. Admin

(Post-meeting note: The English and Chinese versions of the Administration's response were circulated vide PLC Paper Nos. CB(1) 1232 and 1248 on 31 March and 7 April 1998 respectively.)

11. In order to strike a balance between care for the elderly and queue jumping, a member suggested that the Administration might consider requiring adult children of elderly tenants to register on the General Waiting List at the time of issuance of temporary stay permits. The adult children should be automatically added to the tenancies after two years and when their turn on the Waiting List came up, they could be re-allocated to another PRH flat. In the event that the elderly tenants passed away before their adult children became eligible for PRH, the latter should be required to move out from their parent's flats and offered interim housing until their turn for allocation came up. PAS for H undertook to consider the member's view. Admin

12. On housing provision for elderly persons by HS, ED/HS advised that elderly tenants affected by redevelopment would be allocated Elderly Person Flats. As to how HS would handle requests for addition of adult children from single elderly tenants, ED/HS responded that all applications would be assessed taking into consideration individual merits.

V Recommendations for improvement to prevent a re-occurrence of the incident of fallen glass panel in Ping Tin Shopping Centre
(PLC Paper No. CB(1) 1203(6))

13. In reply to a member's question, the Business Director/Commercial and Services (BD/C&S) advised that although supervision of works was the prime responsibility of contractors, HD had revised the inspection checklist used by site supervisory staff and the percentage for mandatory inspections on non-standard safety items. Designating Clerks of Works would be deployed to carry out inspection on these items at key stages to ensure compliance with the required performance standards and regulatory requirements. At members' request, BD/C&S undertook to provide the revised percentage for mandatory inspection. Admin

14. On the question of responsibility for the accident, BD/C&S advised that a special panel under the Housing Authority (HA) had been set up to probe into the matter. Experts and consultants had also been employed to conduct further testing to ascertain the cause of failure of the balustrade in order to determine the degree of responsibility among the contractor, HD's staff and the single operator. The special panel would be able to reach a conclusion after the release of the test results in April 1998. A report on the findings of the investigation would be submitted for members' information in due course. Admin

15. As regards compensation for the victim concerned, BD/C&S said that although claim for indemnity from the victim had not been received, HA was determined to fulfil its obligation as the owner of Ping Tin Shopping Centre.

VI Any other business

16. There being no other business, the meeting ended at 4:40 pm.

Provisional Legislative Council Secretariat
26 June 1998