new initiatives on housing - gov

New Initiatives on Housing

29 June 2018

1.1 Housing policy: Reiterating the four key elements

• Housing is not a simple commodity. It is one of the pillars of a caring and inclusive society. While respecting free market, the Government has an indispensable role to play in providing Hong Kong people with adequate accommodation

• We will focus on home ownership, and will strive to build a housing ladder to rekindle the home ownership hopes of families in different income brackets

• Based on the Long-term Housing Strategy, we will step up our effort in increasing housing supply

• When new supply is not yet available, we will strive to optimise the existing housing resources to help those inadequately housed

1.2 Progress made since the 2017 Policy Address

• Public housing：Continue to identify land for public housing development

• Green Form Subsidised Home Ownership Scheme (GSH) and White Form Secondary Market Scheme (WSM)： Regularised after review; to launch a new GSH project at Cheung Sha Wan (with over 2 500 units) and offer a quota of 2 500 for WSM this year

• Home Ownership Scheme (HOS)：The 2018 HOS sale exercise (covering 4 400 flats) is underway. Over 150 000 applications have been received

• Starter Homes (SH): Formulating the implementation framework after taking into account views expressed by the public

• Private housing: Continue to supply land through the Government’s Land Sale Programme.

1.3 Increasing land supply while making the best use of existing land and housing resources

• Increasing land supply is the fundamental way to address inadequate housing supply

• The Task Force on Land Supply will make recommendations to the Government after the public engagement exercise

• Meanwhile, the Government will continue to make the best use of existing land and housing resources to increase the supply of adequate and affordable housing and encourage more timely supply of first-hand private flats

2.1 Six initiatives under three objectives

Objective Initiative

(1) Making Subsided Sale Flats (SSFs) more affordable

(1) Revising the pricing policy for SSFs

(2) Increasing supply of subsidised housing and enhancing support for transitional housing projects

(2) Inviting the Urban Renewal Authority (URA) to assign its project at Ma Tau Wai Road as an SH pilot project

(3) Reallocating private housing sites for public housing

(4) Setting up a task force to assist the community to take forward transitional housing projects; subsidising the costs of basic works with the $1 billion set aside for facilitating the use of vacant government sites for non-profit-making purposes, the Community Care Fund, etc.

(3) Encouraging more timely supply of first-hand private flats

(5) Introducing “Special Rates” on vacant first-hand private residential units

(6) Amending the Consent Scheme to improve sales practices

2.2 Initiative (1)：Revising the pricing policy for SSFs

• There is an opinion that the prices of HOS flats are too high and should be adjusted and delinked from the market prices

• Existing policy (1) Priced at 70% of the “assessed market value” first (2) Adjusted depending on whether the prices meet the affordability test to ensure:

(a) at least 50% of the flats are affordable to White Form (WF) family applicants (the income limit for families of two-or-more persons is $57,000Note)

(b) affordable = need not use more than 40% of the above income limit on mortgage payments

Note: Net of Mandatory Provident Fund (MPF) contributions

2.3 Initiative (1)：Revising the pricing policy for SSFs (Cont'd)

• The income limit for WF families ($57,000) is set with reference to their household expenditure (particularly their expenditure on mortgage payment). Therefore, if:

• This approach is fine for determining the eligibility for HOS. • However, if the affordability test takes into account the income limit for WF

families, the test will be indirectly affected by property prices, making the prices of HOS flats less affordable at a time of soaring property prices.

Property

price

Expenditure on

mortgage

payment

Income

limit

Number of families

eligible for

HOS

Conclusion: • HOS

o R e v i s e t h e a f fo rd a b i l i t y te s t : u s e t h e m e d i a n m o n t h l y h o u s e h o l d i n c o m e o f n o n - o w n e r

o c c u p i e r h o u s e h o l d s ( a ro u n d $ 3 9 , 5 0 0 N o t e) i n s te a d o f t h e i n c o m e l i m i t fo r W F fa m i l i e s ( $ 5 7 , 0 0 0 ) i n t h e a f fo rd a b i l i t y te s t

e n s u r e a t l e a s t 7 5 % o f f l a t s a r e a f fo rd a b l e ( u p f ro m 5 0 % )

o U s e t h e 2 0 1 8 H O S s a l e e xe rc i s e a s a te s t , t h e f l a t s w i l l b e s o l d a t 5 2 % i n s te a d o f t h e o r i g i n a l 7 0 % o f t h e “a s s e s s e d m a r ke t v a l u e ”

o A l l o t h e r e x i s t i n g p a ra m e te rs r e m a i n u n c h a n g e d , i n c l u d i n g t h e s a m e d i s c o u n t ra te i n t h e p r i c i n g o f a l l f l a t s i n t h e s a m e H O S s a l e e xe rc i s e a n d a d i s c o u n t ra te o f a t l e a s t 3 0 % .

o U n d e r t h e n e w a p p ro a c h , t h e a f fo rd a b i l i t y te s t o f t h e p r i c e s o f H O S f l a t s w i l l n o l o n g e r b e l i n ke d t o t h e m a r ke t p r i c e s .

N o te：F i g u r e i n t h e fo u r t h q u a r te r o f 2 0 1 7 , n e t o f M P F c o n t r i b u t i o n s


9

N o . of f l a t s

S a l e a b l e a re a

A s s e s s e d m a r ke t va l u e

O r i g i n a l p r i c e [ 7 0 % of t h e va l u e

( 3 0 % d i s c o u n t u n d e r t h e

e x i s t i n g m e c h a n i s m ) ]

A d j u s t e d p r i c e [ 5 2 % of t h e va l u e

( 4 8 % u n d e r t h e n e w m e c h a n i s m ) ]

4 4 3 1

2 7 8 – 6 3 1

f t 2

$ 1 2 , 4 0 1 /

f t 2

$ 8 , 6 8 1 /

f t 2

P r i c e r a n g e $ 1 . 5 9 m - $ 6 . 3 m

Av e r a g e p r i c e $ 3 . 6 m

$ 6 , 4 4 9 /

f t 2

P r i c e r a n g e $ 1 . 1 8 m - $ 4 . 6 8 m

Av e r a g e p r i c e

$ 2 . 6 8 m

Note: The figures under "adjusted price” in the above table are calculated based on the average prices approved by the Housing Authority (HA) and the median monthly household income of non-owner occupier households in February 2018 . The above prices are for illustrative purposes only. The actual prices will be based on the announcement of the relevant organisation for the sale of the flats.

• Prices of 2018 HOS f lats


10


Fur ther i l lustration Example：

• A n a s s u m e d 4 0 0 f t 2 f l a t a t K a i L o n g C o u r t i n K a i Ta k f o r s a l e i n 2 0 1 8

o M a r ke t va l u e a s s e s s e d b y H A : $ 1 4 , 0 0 0 / f t 2( a ro u n d 3 0 % l o w e r t h a n f i r s t- h a n d p r i va t e f l a t s i n t h e s a m e d i s t r i c t )

P r i c e d a t 7 0 % of t h e va l u e u n d e r t h e e x i s t i n g m e c h a n i s m : i t i s $ 9 , 8 0 0 / f t 2 ( a f f o rd a b l e t o o v e r 5 0 % of t h e a p p l i c a n t s ba s e d o n t h e m o n t h l y h o u s e h o l d i n c o m e l i m i t of $ 5 7 , 0 0 0 )

T h e p ro b l e m i s t h a t n o t a l l H O S a p p l i c a n t s w i l l re a c h t h e m o n t h l y h o u s e h o l d i n c o m e l i m i t of $ 5 7 , 0 0 0 . A s a re s u l t , t h e p e rc e n t a g e of a f f o rd a b l e f l a t s h a s b e e n o v e re s t i m a t e d a n d t h e p r i c e s of H O S f l a t s a re i n e v i t a b l y l i n ke d t o t h e m a r ke t p r i c e s

U n d e r t h e n e w m e c h a n i s m , t h e m e d i a n m o n t h l y h o u s e h o l d i n c o m e of n o n - o w n e r o c c u p i e r h o u s e h o l d s ( $ 3 9 , 5 0 0 ) w i l l b e u s e d a n d t h e p e rc e n t a g e of a f f o rd a b l e f l a t s w i l l b e i n c re a s e d t o 7 5 % . T h e f l a t w i l l b e s o l d a t 5 2 % of t h e “ a s s e s s e d m a r ke t va l u e ”, i . e . $ 7 , 2 8 0 / f t 2 a n d i t s p r i c e w i l l d ro p f ro m t h e o r i g i n a l $ 3 . 9 m t o $ 2 . 9 m

• GSH o a further d iscount of 10% f rom that dec ided for the

preceding HOS sa le exerc ise , making GSH even more af fordable and att ract ive to PRH s i tt ing tenants

o provid ing another v iab le a l ternat ive to PRH appl icants who are about to be a l located with a PRH f lat Note 1

• SH o Target ing middle-c lass fami l ies with h igher income Note2

o 10%-20% less than that dec ided for the preceding HOS sa le exerc ise

Note 1：Applicants who have passed the eligibility vetting Note 2：The eligibility criteria will be explained in Initiative(2).


• A l i e nat i o n re st r i c t i on s fo r H O S a n d G S H o T i g hte ni n g o f t h e a l i e n at i o n re st r i c t i o ns w i l l b e co n s i d ere d i n

l i g ht o f t h e n ew p r i c i n g m e c h a n i s m

• Pay m e nt o f p re m i u m o T h e p reva i l i n g p o l i c y re m a i n s u n c h a n ge d . U n d e r t h e n ew

p r i c i n g m e c h a n i s m , o w n e rs o f H O S f l a t s ca n s e l l t h e i r f l a t s to e l i g i b l e b u ye rs ( h o l d e rs o f G re e n Fo r m c e r t i f i cate s o r e l i g i b l e W S M a p p l i ca nt s ) i n t h e H O S s e co n d a r y m a r ket a f te r a c e r ta i n p e r i o d o f t i m e w i t h o u t t h e p ay m e nt o f a p re m i u m . I f t h e H O S f l a t s a re s o l d i n o p e n m a r ket , t h ey h ave to p ay H A a p re m i u m a c co rd i n g to t h e d i s co u nt at t h e t i m e o f s a l e ( Fo r exa m p l e , t h e p re m i u m fo r a H O S f l a t s o l d i n 2 0 1 8 w i t h a 4 8 % d i s co u nt w i l l b e 4 8 % o f t h e c u r re nt m a r ket va l u e )

• T i m e o f i m p l e m e ntat i o n o T h e n ew p r i c i n g p o l i c y w i l l b e a p p l i ca b l e to f u t u re S S Fs o H A w i l l b e i nv i te d to co n s i d er w h et h e r to i m p l em e nt t h e n ew

p r i c i n g p o l i c y i n t h e 2 0 1 8 H O S s a l e exe rc i s e


• Reasons o There are st i l l a lot of procedures to go through before

the Anderson Road S ite can be re leased to the market o A test on the attract iveness of SH among the target group

should be conducted as soon as poss ib le

• URA's project at Ma Tau Wai Road o Can provide 450 SH units o Around 260-507 f t 2

o I t i s expected that the pre-sale exerc ise can be launched in December 2018 the soonest and construct ion can be completed in the second quarter of 2019

2.9 Initiative (2): Inviting URA to assign its project at Ma Tau Wai Road as an SH pilot project

• Major el igibi l ity criteria: o H on g Kon g re s i d e n t s w h o h a ve re s i d e d i n H on g Kon g f or

s e ve n ye a r s or more o H a ve n e ve r ow n e d a n y re s i d e n t i a l p rop e r t y i n H on g Kon g o I n c ome f a l l s b e t we e n t h e p re va i l i n g i n c ome l i mi t s f or H O S

a n d 3 0 % h i g h e r t h a n s u c h l i mi t s o A s s e t s h ou l d n ot e xc e e d t h e l i mi t of 3 0 % a b ove t h e

p re va i l i n g a s s e t l i mi t s f or H O S a n d t h e re i s n o l owe r l i mi t

2.10 Initiative (2): Inviting URA to assign its project at Ma Tau Wai Road as an SH pilot project (Cont'd)

F i g u r e s c a l c u l a t e d w i t h r e f e r e n c e t o t h e 2 0 1 8 H O S s a l e e x e r c i s e

O n e - p e r s o n h o u s e h o l d a p p l i c a n t

T w o - o r - m o r e - p e r s o n h o u s e h o l d a p p l i c a n t

L o w e r i n c o m e

l i m i t

$ 1 h i g h e r t h a n t h e H O S l i m i t

$ 2 8 , 5 0 1 $ 5 7 , 0 0 1

U p p e r i n c o m e

l i m i t

3 0 % h i g h e r t h a n t h e H O S l i m i t

$ 3 7 , 0 5 0 $ 7 4 , 1 0 0

U p p e r a s s e t l i m i t

3 0 % h i g h e r t h a n t h e H O S l i m i t

$ 1 , 2 8 0 , 0 0 0 $ 2 , 5 5 0 , 0 0 0

• Pricing o The affordabi l i ty of e l ig ib le persons wi l l be taken into

account and a certain d iscount wi l l be appl ied to the “assessed market value” of SH units in the sale exerc ise

o The discount wi l l be 10%-20% lower than that decided for the preceding HOS exerc ise so as to maintain the pos it ioning and re lat iv i ty of d i f ferent subs id ised housing f lats

o URA wi l l determine the latest “assessed market value” and the actual d iscounted pr ice of SH units according to the prevai l ing market s i tuation before the pre-sale for the approval of the Government

2.11 Initiative (2) : Inviting URA to assign its project at Ma Tau Wai Road as an SH pilot project (Cont'd)

• According to the URA's latest assessment as at end-June 2018, the average “assessed market value” of the SH units of the Ma Tau Wai Road project is $23, 500 per square feet (based on saleable area).

• With reference to the HOS launched in 2018 (with a discount rate of 48% according to the new pricing mechanism) , the discount for SH units of the Ma Tau Wai Road project should range from 28% to 38% (i.e. the units should be sold at 62 % to 72% of their market price).

2.12 Initiative (2) : Inviting URA to assign its non-joint venture project at Ma Tau Wai Road as an SH pilot project (Cont'd)

Ma Tau Wai Road SH pilot project

“Assessed market value” as at end-June 2018 (based on average

saleable area) About $23,500 /ft2

Discounted price (based on average saleable area)

$14,570/ ft2 $16,920/ft2

62% of “assessed market value”

(or a 38% discount)

72% of “assessed market value”

(or a 28% discount)

Note： The price is for illustrative purposes only. The actual selling price is based on the announcement for the sale of the units by the organisation.

• Mo rtga ge arran gem ent o Th e H o n g Ko n g Mo rtgage Co rp o rat ion w i l l p ro v ide m o rt gage

i n s urance co ver ing u p to 90% o f th e p ro perty va l u e u n der a s p e c ia l s c hem e fo r S H b u yers

• A l i enat ion re st r i c t ions o Re str i c t ions w i l l b e m o re st r i n gent th an th o se fo r H OS o Ow n ers w i l l n o t b e a l l o wed to s e l l o r l e t th e i r u n i ts i n th e

f i rst f i ve ye ars af te r p u rc hase; b u t th ey are a l l owed to s e l l o r l et th e i r u n i t s i n o p e n m arket af te r p aym ent o f p re m ium afte r th e f i rst f i ve ye ars

o U RA w i l l n o t b u y b ac k any S H u n i ts o Th e re i s n o s u c h o pt i on as to s e l l th e u n i ts to e l i g ib le

p e rsons i n a s e condar y m arket w i th out p aym ent of p re m ium

2.13 Initiative (2) : Inviting URA to assign its non-joint venture project at Ma Tau Wai Road as an SH pilot project (Cont'd)

• Re al locat ing p r i vate h o u s ing s i te s fo r p u b l ic h o u s ing ( w h ether fo r s a l e or re nta l w i l l d e pend o n th e s i tu at ion)

2.14 Initiative (3) : Reallocating private housing sites for public housing

Ye a r L oc a t i on N u mb e r of s i te s

N u mb e r of u n i t s

( e s t i ma te d )

2018/19 Anderson Road Quarry

1 1 400

2019/20 Kai Tak 3 5 400


2 1 500


3 2 300

To ta l 9 10 600

2.15 Initiative (4): Setting up a task force to facilitate the community initiatives of transitional housing • A t a s k f orc e w i l l b e s e t u p u n d e r t h e Tra n s p or t a n d H ou s i n g

B u re a u to p rov i d e on e - s top , c oord i n a te d s u p p or t f or c ommu n i t y i n i t i a t ives of t ra n s i t i on a l h ou s i n g

• I n i t i a t ive s f or c on s i d e ra t i on i n c l u d e：

I n i t i a t ive s P rog re s s

Community Housing Movement • It targets to provide 500 units, with 153 units already rolled out

Constructing pre-fabricated modular housing on idle sites

• Hong Kong Council of Social Service’s Modular Social Housing Scheme – Nam Cheong Street will provide 90 units

• Processing three applications for constructing pre-fabricated modular housing on idle government sites

Provision of financial assistance • Subsidising the costs of basic works with the $1 billion set aside for facilitating the use of vacant government sites for non-profit-making purposes, the Community Care Fund, etc.

Allowing owners of Hong Kong Housing Society’s subsidised housing with premium unpaid to let their flats

• To be rolled out in Q3 2018

2.16 Initiative (5): Introducing “Special Rates” on vacant first-hand private residential units

As at 31 March P rojected supply of first-hand residential

properties for the coming 3 to 4 years

Unsold first-hand private residential units in completed

projects (percentage to the then projected supply)

2013 67 000 4 000 (6%)

2014 72 000 6 000 (8%)

2015 78 000 6 000 (8%)

2016 92 000 6 000 (7%)

2017 96 000 8 000 (8%)

2018 96 000 9 000 (9%)

Complet ion year

Unsold units in completed projects (as at 31 March 2018)

2011 - 2015 2 000

2016 1 000

2017 5 000

Q1 2018 1 000

Total 9 000

2.17 Initiative (5): Introducing “Special Rates” on vacant first-hand private residential unit (Cont'd)

• “S p e c i a l Rate s ” w i l l b e i nt roduced on vacant f i rst - h and p r i vate re s i dent ia l u n i ts by am e n ding th e Rat i n g Ord i n ance

• Ow n ers ( m ai n ly d eve lopers) of f i rst - h and p r i vate re s ident ia l u n i t s w i th Oc c u pat ion Pe rm it i s s ued fo r 12 m o nths o r m o re w i l l b e re q u ired to fu rn i sh an n ual retu rns to th e G o vernment o n o c c upanc y statu s o f th e u n i ts

• U n i t s th at h ave n o t b e en o c c upied o r re nted o u t fo r m o re t h an s i x m o nths d u r ing th e p ast 12 m o nths w i l l b e co n s idered as vacant an d s u b ject to “S p e c ia l Rate s ”

• “S p e c i a l Rate s ” w i l l b e co l lected by th e RV D an n ual ly at t wo t i m e s ( i .e . 20 0%) o f th e rate able va l u e o f th e u n i ts co n cerned, w h i ch i s ro u g hly e q ua l to 5% o f th e p ro perty va l u e

• A n A m e ndm ent B i l l i s p l anned to b e i nt roduced i nto t h e Le g i s lat ive Co u nc i l ( Le gCo) d u r ing th e 2018- 19 l e g is l at ive year. Th e n ew m e as ure w i l l take ef fe c t af te r gazetta l o f th e A m e n dment Ord i n ance fo l l owing p as sage o f th e A m e n dment B i l l at Le gCo

2.18 Initiative (5): Introducing “Special Rates” on vacant first-hand private residential unit (Cont'd)

• Developers wi l l be required to offer for sale no less than 20% of the res identia l units subject to the re levant pre-sale consent at each turn of sale , regardless of the sales method

• I f unsold res identia l units are less than 20%, the developer has to offer for sale a l l remaining units in one go

• Developers fa i l ing to comply with the requirement for the f i rst t ime wi l l receive a warning from LandsD and need to provide explanation. Subsequent or repeated breach of the requirement wi l l result in the pre-sale consent being cancel led without fur ther warning

• The requirement wi l l take immediate effect upon announcement, and apply to new pre-sale consent appl icat ions and appl icat ions current ly being processed by LandsD

2.19 Initiative (6): Amending the Consent Scheme to improve sales practices

3.1 Conclusion

• Addressing the housing problem is the pr ior ity of the current-term Government, and the Government wi l l spare no effor t in increasing the supply of adequate and affordable housing to improve the l iv ing condit ions of the people and rekindle their hope of home ownership

• Increasing land supply is the fundamental way to address the housing problem. We wi l l announce the blueprint of ident i f y ing new land and releasing exist ing land for housing development

• The community is invited to act ively take par t in the publ ic engagement exercise of the Task Force on Land Supply to contr ibute to the formulat ion of land supply strategy for Hong Kong

new initiatives on housing - gov

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