LegCo Panel on Housing Meeting on 7 September 1998

Possible Abuse of Home Purchase Loan Scheme


This paper informs Members of the eligibility criteria for applicants of and restrictions on properties that can be purchased under the Home Starter Loan Scheme (HSLS), and notes the situation with regard to possible abuse of these provisions.


2. The Government's intention to introduce the HSLS was announced by the Chief Executive in October 1997. The HSLS is designed to assist first time home buyers in the low and middle income groups to purchase their own homes in the private sector. Under the scheme, loans of $600,000 or up to 30% of property price, whichever is the lower, are offered to qualified applicants. The Hong Kong Housing Society (HS) has been appointed to implement the Scheme.

3. The Finance Committee approved on 9 January $18 billion to fund the HSLS over the period 1998-99 to 2002-3 and the scheme itself was launched in April 1998. A revised drawdown schedule for the scheme for 1998-99 was approved by the Finance Committee on 31 July 1998, such that the total funding for this financial year was increased from $3.6 billion to $7.2 billion. Approximately 12,000 loans can be offered in 1998-99 as a result.

Current position

4. As at end August 1998, about 16,000 applications had been received by the HS. More than 2,000 applicants had been issued Certificates of Eligibility. About 400 had purchased properties.

Current eligibility criteria and restrictions on properties purchased

5. Applicants for the HSLS must have monthly household incomes of not more than $70,000 per month, possess net assets worth not more than $1.2 million, and must not have owned any local residential properties during the past ten years. Details of the eligibility criteria are at Annex A. The properties that can be purchased are restricted to private domestic flats in vacant possession, and less than 30 years old.

Overseas properties

6. The current asset limit of $1.2 million is to ensure that only families in genuine need of downpayment assistance to purchase their homes can receive assistance. The value of any overseas property, whether residential or not, is counted towards this asset. A list of declarable assets is at Annex B.

Possible abuse of the HSLS

7. We are concerned about the recent case of an HSLS applicant using his loan to purchase a "luxury" flat. The circumstances under which this case occurred were unusual. In most cases, flats are purchased by HSLS beneficiaries at prices below $2.5 million. (A breakdown of prices for properties purchased under the HSLS is at Annex C.) Nevertheless, we are determined to prevent the occurrence of such cases in the future and accordingly are considering urgently means to limit the financial resources that an applicant can deploy in the purchase of the flat in accordance with the purpose and spirit of the scheme as approved by Members.

8. Since the launch of the scheme in April, the HS has found no evidence of other abuses of the scheme (for example, false declarations). Eligible applicants are required to make statutory declarations or affirmations on the information that they provide. It is a criminal offence for applicants to make false statements in obtaining loans under the HSLS. The HS carries out further random checks even after the granting of loans.

Housing Bureau
September 1998

Annex A

Home Starter Loan Scheme eligibility criteria

  1. The applicant and family members included in the application (the family) should comprise at least two directly related members including the applicant. All family members included in the application must be residing in Hong Kong.

  2. Total monthly family income must not exceed $70,000.

  3. No family members may have owned any residential properties in Hong Kong in any form or manner directly or indirectly within a period of 120 months prior to the date of application, or before the issue of a "Certificate of Eligibility".

  4. The applicant must be aged 18 or over, and prior to the date of the application have resided in Hong Kong for seven or more years, hold a Hong Kong Identity Card indicating (a) right of abode in Hong Kong or (b) stay in Hong Kong not limited by the Hong Kong Immigration Department.

  5. The family may not own total disposable assets of more than HK$1.2 million.

  6. No family members included in the application may, prior to the granting of the loan, be authorised occupants of public rental housing units or authorised tenants/occupants of Home Ownership Scheme units, nor have enjoyed home purchase assistance offered by the Government. Principal tenants of public rental housing flats are not eligible to apply.

Annex B

Declarable assets under the HSLS

  1. Landed properties including both residential and non-residential properties at current market value (after deducting outstanding mortgage amount, if any), and including lease agreements and Letters A or B entitlements;

  2. Stocks and shares at current value;

  3. Vehicles including private and commercial vehicles, transferable vehicle licenses including taxi and public light bus licenses;

  4. Bank deposits, unit trust funds; and

  5. For those engaged in business, all categories of assets owned by the companies operating such business and other assets howsoever owned.

Annex C

Prices paid for flats purchased
under the HSLS upto 28 August 1998

Purchase price (HK$)



Below 1.0 million

1.0 - 1.5 m

1.5 - 2.0 m

2.0 - 2.5 m

2.5 - 3.0 m

3.0 - 3.5 m

3.5 - 4.0 m

4.0 - 4.5 m

4.5 - 5.0 m

5.0 m & over