scmp:Buyers may have unfair advantage under new HOS

Buyers may have unfair advantage under new HOS

Authority advisers say revived scheme arrangements such as a fixed premium will almost guarantee profits

Joyce Ng Updated on Oct 14, 2011 http://goo.gl/PqY48

The newly revived subsidised Home Ownership Scheme gives flat buyers advantages denied to owners under the old scheme, and this may be considered unfair, Housing Authority advisers warned yesterday.
Their comments came after Chief Executive Donald Tsang Yam-kuen announced in his policy address on Wednesday that the HOS, suspended in 2002, would be revived with changes in pricing and resales practices. The Housing Authority will build an annual average of 5,000 flats between 2016 and 2020 for households earning no more than HK$30,000 a month.

Under the old scheme, a flat owner had to pay a premium to the authority when reselling it on the private market. This was deemed necessary because the authority had sold it to the buyer at a steep discount. If the discount was 30 per cent, for example, the gain in market price had to be shared with the authority, which would be paid 30 per cent of that gain.

Under the new arrangement, the premium - the difference between market price and discounted purchase price - would be fixed at the time of purchase. The flats would be priced with reference to applicants' mortgage repayment ability, suggested as a 40 per cent mortgage-toincome ratio. If the market goes up by the time the flat is resold, most of the rise in market price can be recouped after deducting the fixed premium.

Wong Sing-chi, a Democrat and a member of the authority's subsidised housing committee, said the new scheme almost guaranteed that flat buyers, the lucky few, would make a profit. "This will create new social conflict," he said. "The old scheme owners would find it unfair."

Wong suggested giving a resale discount to the old scheme owners.

A caller to a radio programme sounded the same warning. "The new scheme mixes people's investment needs and housing needs," he said. "It's a Mark Six for the public."

Housing secretary Eva Cheng said that while she had taken note of these concerns, the scheme could help people to buy a home on the private market. "We understand there are views that the new scheme would offer 'double subsidies'," she said.

"The new principle of the future HOS is to facilitate upward mobility. We won't forget to make it balanced, so that the arrangement is fair to existing HOS homeowners and acceptable to society."