Information Paper for the
Legislative Council Panel on Housing

Tenants Purchase Scheme


PURPOSE

To brief Members on the latest position of Tenants Purchase Scheme (TPS) Phase 1 and provisional arrangements for TPS Phase 2.

TPS PHASE 1

Sales


2. Tenants of 26,896 flats in TPS Phase 1 were invited to submit offers to buy in January 1998. As at 31 October, 17,148 (64%) had made an offer and submitted intention money of $2,500. Assignments have been executed for 14,772 (55%). Tenants who have not yet offered to buy have been reminded that the period for the special credit ends on 31 December 1998. Some 450 vacant flats in TPS Phase 1 estates will be offered for sale to Green Form purchasers (i.e. current and prospective public housing tenants) under Home Ownership Scheme Phase 20A to be launched in December 1998.

Withdrawals

3. A breakdown of offers and assignments by estate is at Annex A. Also shown is the number of withdrawals prior to acceptance by the Housing Authority (HA) and rescinded cases after acceptance.

4. A breakdown of the reasons for withdrawal/rescission is at Annex B. The most common reason given was dissatisfaction with the Government Lease and Deed of Mutual Covenant (DMC). Exceptionally, for Phase 1, it was necessary for sale of flats to proceed before the Government Lease and DMC were finalised. Although the terms of the Lease and DMC were not less favourable than those indicated in sales brochures, the need to confirm minor amendments to owners' rights and obligations at a late stage led to some misunderstandings. Since withdrawal for reasons of dissatisfaction with Lease and DMC entitled purchasers to a full refund, while withdrawal after acceptance for other reasons did not, the stated reasons for withdrawal need to be interpreted with caution.

5. Of the 957 families withdrawing as shown in Annex B, 357 families have now resubmitted offers.

Repairs

6. Details of the requests for minor maintenance to flats on sale and progress are at Annex C.

7. Of the 26,017 requests received, 1,953 were for Tenant-to-Pay items. A list of the most common items and charges is at Annex D.

TPS PHASE 2

Schedule


8. The Home Ownership Committee (HOC) of the Housing Authority will consider pricing and other details for six TPS estates (27,161 flats) comprising TPS Phase 2 in early 1999. The followings are provisional proposals pending the approval of the HOC.

Pricing

9. The pricing of TPS Phase 2 flats will follow the pricing formula approved by the Housing Authority, which provides for the calculation of a list price based on the Adjusted Replacement Cost (ARC), with a special credit to ensure affordability (total housing monthly expenditure after purchase for most families to be between 1.5 and 2 times rent). Preliminary calculations show that the ARC is currently very close to the level at the time of approval of Phase 1 TPS. As for Phase 1, a first year and a second year credit would continue to be offered. End prices would therefore be close to those for Phase 1.

Maintenance

10. As for Phase 1, estates selected for sale are generally in good maintenance condition. Some minor upgrading to security systems and ground floor lift lobbies is in hand and will be completed prior to sale.

11. Given the large number of requests for minor repairs within their flats received for Phase 1, Phase 2 tenants were invited to submit requests at an early date (in August 1998) to ensure the Housing Authority can complete all such repairs before tenants are invited to offer to buy. Details of the requests received are at Annex E. It is expected that all repair works will be completed before March 1999.

Land Rights and Obligations

12. The terms of a DMC for Phase 2 are now being prepared and will be finalised before sale. The DMC will provide an explicit allocation of rights and obligations on the basis of undivided shares and management shares. The Government Leases and DMCs for each estate will be available for purchasers' perusal before sale.

FUTURE PROGRAMME

13. We have announced estates to be included in TPS Phases 3 and 4. We are now identifying suitable estates for inclusion in the programme from Phase 5 onwards. We will make a recommendation on the selection of estates for Phase 5 to the HOC for approval in mid 1999.


Housing Department
December 1998


Annex A

Tenants Purchase Scheme Phase 1
Position as at 31.10.98


(a)

Estate

(b)

Offers

(c)

Withdrawn Offers

(d)

Live Offers (b)-(c)

(e)

Offers accepted by HA

(f)

Offers rejected

(g)

Offers rescinded

(h)

Live accepted Offers

(i)

Assignments

Cheung On

5,251

167

5,084

4,888

0

290

4,598

4,592


(71.56%)

(2.28%)

(69.28%)

(66.61%)

(0.00%)

(3.95%)

(62.66%)

(62.58%)

Fung Tak

2,918

24

2,894

2,679

4

142

2,537

2,384


(55.19%)

(0.45%)

(54.74%)

(50.67%)

(0.08%)

(2.69%)

(47.99%)

(45.09%)

Heng On

4,075

27

4,048

3,794

0

79

3,715

3,556


(69.57%)

(0.46%)

(69.11%)

(64.78%)

(0.00%)

(1.35%)

(63.43%)

(60.71%)

Kin Sang

1,737

33

1,704

1,589

1

43

1,546

1,442


(65.50%)

(1.24%)

(64.25%)

(59.92%)

(0.04%)

(1.62%)

(58.30%)

(54.37%)

Wah Kwai

2,063

67

1,996

1,870

7

43

1,827

1,648


(65.78%)

(2.14%)

(63.65%)

(59.63%)

(0.22%)

(1.37%)

(58.26%)

(52.55%)

Wan Tau Tong

1,428

6

1,422

1,235

2

36

1,199

1,150


(54.38%)

(0.23%)

(54.15%)

(47.03%)

(0.08%)

(1.37%)

(45.66%)

(43.79%)

Total:

17,472

324

17,148

16,055

14

633

15,422

14,772


(64.96%)

(1.20%)

(63.76%)

(59.69%)

(0.05%)

(2.35%)

(57.34%)

(54.92%)

Notes: figure in bracket represents percentage against total no. of saleable flats


Annex B

Analysis of Reasons of Withdrawal/Rescindement in
Tenants Purchase Scheme Phase 1


Withdrawal prior to acceptance

Reason

No.

Disagreement to the finalized lease condition, DMC

118

Financial Difficulties

56

Opt HOS/HPLS

10

Apply for change of purchasers

31

Repair and maintenance problem

8

Death of purchaser

3

Purchaser’s illness

1

Family disputes

1

Personal Reason

93

Tenancy Matters

3

Total

324



Rescindments after Acceptance

Reasons

No.

Disagreement to the finalized lease condition, DMC

403

Financial Difficulties

146

Opt HOS/HPLS

9

Apply for change of purchasers

38

Apply for change of discount option

1

Personal Reason

32

Not satisfied with Management Fee & Rates

1

Repair and maintenance problem

2

Flat too small

1

Total

633

Note

DMC -

Deed of Mutual Covenant

HOS -

Home Ownership Scheme

PSPS -

Private Sector Participation Scheme




Annex C

Tenants Purchase Scheme Phase 1
Progress with Minor Maintenance Requests

Position as at 31.10.98


Estate

No. of flats for sale

Requests received 1

Cases certified completed

Cases in progress/ under certification2

Cheung On

7,338

8,090

7,599

491

Fung Tak

5,287

3,189

2,518

671

Heng On

5,857

6,420

5,782

638

Kin Sang

2,652

1,959

1,735

224

Wah Kwai

3,136

4,295

4,155

140

Wan Tau Tong

2,626

2,064

1,934

130

TOTAL

26,896

26,017

23,723

2,294



1.Serial requests by tenants may result in requests received exceeding total number of flats for sale.

2.Includes cases reported completed by contractor and awaiting checking and certification by Housing Department. Most cases are completed within 4-6 weeks. In all 2,294 cases in progress, the requests were made within the 6 weeks period preceding 31.10.98.




Annex D

Tenants-to-pay Minor Maintenance Items and Charges (1997/98)



Works Items

Charges ($)

1.

Renew P.V.C. traps (n.e. 50mm dia.)

180

2.

Ease and adjust door/Renew hinges to door (metal or wooden)

180

3.

Renew pull handle to door

180

4.

Renew letter box lock

180

5.

Clear choked outlet to basin or sink

180

6.

Clear choked outlet to floor drain

180

7.

Clear choked outlet to bath tub

180

8.

Clear choked outlet to W.C.

180

9.

Repair overflow problem of flushing cistern

180

10.

Renew water tap including brass tap

180

11.

Renew lever handle and/or nylon cord pull and/or backboard to flushing cistern

180

12.

Ease and adjust collapsible gate (exc. welding)

180

13.

Refix loosen basin or sink

180

14.

Supply and fix chain & plug to basin or sink

180




Annex E

Tenants Purchase Scheme Phase 2 -
Minor Maintenance Requests

Position as at 31.10.98


Estate

No. of flats for sale

No. of requests received

Chuk Yuen (North)

6,736

2,780

Tak Tin

5,060

1,624

Tin King

3,156

746

Tsui Wan

2,340

618

Wah Ming

5,071

1,123

Yiu On

4,798

2,161

TOTAL

27,161

9,052