Hong Kong Christian Service

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Issue 010
2015 November

Pressing need to rebuild the rental market

As at the end of September 2015, there were 28.5 million applications on the public rental housing (PRH) waiting list while there is a significant amount of low income families living in partition units, factories, pig sties and coffin rooms waiting for their turn. This phenomenon reflects the insufficient supply of public housing and the unmet rental needs of low income families. The departments concerned should conduct a comprehensive review of the rental policy in response to the needs for rental housing.

Increase rental housing supply

Property vacancy (note 1) has always been criticised. In 2013 the government had attempted to introduce vacant property tax to tackle with hoarding and profiteering, speculation, and those owners who are waiting for a good price to sell their properties. However, this was withdrawn as the vacancy, as pointed out by the department concerned, was low. The department concerned has always been considered slipshod in their statistical calculation of vacancy.It is then difficult for the general public to understand why the government does not increase developers’and investors’cost through the introduction of vacancy property tax which in turn might encourage investors to rent out their properties.

Rent control and security of tenure

Apart from increasing supply of rental housing, security of tenure (note 2) is another effective means to reconstruct the rental market. The departments concerned should conduct research into rent control and security of tenure and make recommendations. Even though there are successful and unsuccessful overseas examples,the government was seen as biased on this matter as much emphasis was put on unsuccessful cases in past reports.

The percentage increase of rent has become unaffordable for most of the people. Fluctuations follow the economic cycles. If so, why the government does not make use of its 2003 rent control (note 3) experience and use successful overseas examples to formulate a control policy suitable for Hong Kong?

Housing policy is not just strategies about land development and supply, the government should consider how to allocate the land fairly, how to balance the investment value of domestic property against the real need of living, and how to make the best use of our housing resources etc. Under such an atmosphere of commercialisation of domestic properties,if the government thinks it can still rely on the market activities to protect rental market,it is just self-deception. Apart from rebuilding the rental market as mentioned above, the government could also embrace open-mindedness to an alternative style of living, such as“Light Home”a housing scheme by Lightbe (a social enterprise), to encourage conscientious owners to offer opportunities for grass root families. Domestic housing is a daily necessity for the general public which needs determination from the government to solve the housing problems in Hong Kong.

Note 1:
according to Rating and Valuation Department, private units in 2014 the vacancy was 3.8%, (43,263 units). Local bodies, however, based on the data of Census and Statistics Department, pointed out that people living in private units is 9.7% less than the number of private units.

Note 2:
In 1981 the government had drawn up security of tenure during which there was an acute shortage of domestic units, therefore individual owners had greater bargaining power and could increase the rent upon renewal of tenancy agreement, therefore the government introduce rental control to protect the rights of the tenants, unless the owner can give strong reasons (such as reconstruction, self-use, rent arrears) otherwise the owners cannot refuse renewal of contract in general.

Note 3:
Rent control and security of tenures were withdrawn completely in 1998 and 2004 respectively.

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