On starter's orders ... - Lam spells out criteria for new homes scheme

Top News | Samantha Wong and Phoenix Un 12 Oct 2017

Chief Executive Carrie Lam Cheng Yuet-ngor announced the eligibility for the new Starter Homes scheme yesterday, with the upper income limit set at HK$34,000 a month for single people and HK$68,000 for households with two or more members.

The amount will fall between the limits for Home Ownership Scheme applicants and are about 30 percent higher than the HOS limit, Lam said in her policy address.

The government estimates there are about 55,000 households in Hong Kong that fall within the income range of the scheme and own no property.

A pilot scheme will launch on Anderson Road, Kwun Tong, which will have 1,000 flats for Starter Homes. The remaining 700 units will be private housing for the developer. Details of the scheme will be finalized by the middle of next year.

The managing director at property consultant JLL, Tsang Hon-ping, said the problem with the private housing market is high prices, and the effectiveness of the chief executive's housing policy is doubtful.

"Those with salaries even fractionally above the cap will find themselves ineligible for the scheme and be forced to pay the full, higher market property prices," Tsang said.

Thomas Lam Ho-man, senior director and head of valuation and consultancy at Knight Frank, said targeted families with household income of a maximum HK$68,000 takes in only a small portion of the population, at about 10 percent, and the government should consider home purchase needs for different income levels.

Knight Frank believes the Starter Homes will put pressure on small and middle-size property developers as they focus on small flats, while the policy will have less impact on large developers.

The Starter Homes scheme will incorporate provisions in the land lease to require developers to pursue mixed developments - that is to design, build and offer for sale a specified number of units in addition to private housing units.

Sources say the land lease for the Starter Homes plots will list the range of price per square foot, but the developer can set the price within the range.

The developers have to sell these units to target buyers who meet the eligibility criteria set by the government.

These criteria include Hong Kong residents who have lived in Hong Kong for seven years or more and have never owned any property in the city.

A source said overseas properties the applicants own will be counted as their assets, which cannot exceed a limit that is yet to be decided.

Lam also proposed that the government substantially increase the supply of units under the green form subsidized HOS scheme, which targets public housing tenants. Future public housing developments should include more green form subsidized HOS units instead of public rental housing units.

After a preliminary technical assessment, the Housing Department will consider 4,000 new public rental housing units in Fo Tan, Sha Tin, that can be converted into green form units for sale in late 2018.

To increase the supply of transitional housing, with a view to alleviating the hardship faced by families on the public rental housing waiting list and the inadequately housed, Lam proposed five measures. These include optimizing the use of idle government premises, encouraging the Urban Renewal Authority to offer units in old buildings and allowing the owners of its subsidized housing to rent out their flats with premium unpaid at below market rentals on a pilot basis.

The government will also consider exploring the conversion of industrial buildings into transitional housing by waving land premium, and supporting NGOs to explore constructing pre- fabricated modular housing on idle sites.

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