LegCo Paper No. CB(1) 955/96-97
(These minutes have been seen
by the Administration)
Ref : CB1/PL/HG/1

LegCo Panel on Housing

Minutes of special meeting held on Monday, 13 January 1997, at 10:45 am in Conference Room A of the Legislative Council Building

Members present :

Members attending :

Members absent :

Public officers attending :

Items I and II
Mr Andrew R Wells: Deputy Secretary for Housing
Item II
Mr Y L CHAN: Senior Assistant Director (Housing Administration)
Ms CHIU Woon-sheung: Senior Housing Manager (Rent and Welfare)

Attendance by invitation :

Item I
Hong Kong Housing Society
Mr Victor SO: Executive Director (Hong Kong Housing Society)
Ms L C WONG: Director (Estate Management)

Clerk in attendance :

Mrs Vivian KAM: Chief Assistant Secretary (1)2

Staff in attendance :

Mr LEE Yu-sung: Senior Assistant Legal Adviser
Miss Becky YU: Senior Assistant Secretary (1)3

I Redevelopment of Kwun Lung Lau and Tanner Hill Estate

II Briefing on Housing (Amendment) (No. 3) Bill 1996 and Housing (Amendment) Bill 1997

Housing (Amendment) (No. 3) Bill 1996

Housing (Amendment) Bill 1997

III Any other business

I. Redevelopment of Kwun Lung Lau and Tanner Hill Estate

(Leg Co Paper No. CB(1) 651/96-97(01)-(05))

The Chairman was dissatisfied with the late provision of the Chinese version of the information paper for this agenda item given the fact that the Administration was notified of the meeting on 20 December 1996. He reiterated the request made at the last meeting on 6 January 1997 for the Administration to make available bilingual information papers at least five working days in advance of meetings. The Chairman added that he would consider reporting such unsatisfactory practices to the House Committee of the Legislative Council (LegCo) should this occur again. The Deputy Secretary for Housing (DS for H) apologized for the delay and assured members that the situation would be improved upon the impending creation of a Senior Chinese Language Officer post in the Housing Branch.

2. At the invitation of the Chairman, the Executive Director of the Hong Kong Housing Society (ED of HKHS) introduced the information paper. He said that affected families of Kwun Lung Lau (KLL) and Tanner Hill Estate (THE) were notified of the redevelopment programmes and related re-housing arrangements on 9 December 1996. It was estimated that 556 and 563 families comprising 1,950 and 2,026 residents respectively would be affected as a result of the redevelopment of KLL Phase I and THE. At least five public rental housing (PRH) estates on Hong Kong Island had been identified for re-housing the affected families. These included Healthy Village Phases I and III, Lai Tak Tsuen, Ming Wah Dai Ha and Yue Kwong Chuen. Furthermore, KLL Phase II would be used to decant families affected by the Phase I redevelopment. Tenants concerned would also be accorded priority in purchasing flats under the Flats for Sale Scheme (FFSS). ED of HKHS added that the Society would proceed with KLL Phase II redevelopment upon completion of Phase I by the year 2002 and affected tenants would be given priority for re-housing in the 840 new rental flats produced under Phase I. The redevelopment of KLL Phase II was expected to be completed by the year 2007.

3. Members considered it imprudent for the Administration to proceed with the redevelopment programmes in view of the limited number of reception PRH flats available within the districts concerned; they sought elaboration on the number and rent levels of vacant flats in the five PRH estates. Some members expressed concern that affected tenants might have difficulties in paying the new rents upon relocation, and that elderly tenants might find it hard to adapt to new environment in the event of resettlement in other districts. In response, the Director (Estate Management) (D (EM)) of HKHS advised that the Society had a current stock of 209 vacant PRH flats distributed in the following estates:

Name of Estate	Number of vacant flats	Monthly rent from 1 April 1997
Ming Wah Dai Ha	58	$765 - $2,230
Healthy Village Phase I	5	$855 - $5,780
Healthy Village Phase III	4	$975 - $1,560
Lai Tak Tsuen	20	$1,160 - $2,245
Yue Kwong Chuen	20	$410 - $1,745
KLL Phase II	102	$1,030 - $1,795

She supplemented that according to past experience, HKHS could recover about 600 PRH flats over a period of two years including those recovered through the sale of FFSS flats. The forthcoming sale of FFSS flats in Healthy Village Redevelopment Phase II would enable HKHS to recover more than 700 PRH flats for re-allocation to tenants affected by the redevelopment of KLL and THE. The Society had so far received about 500 applications for the FFSS project. Of these, 170 came from affected tenants of KLL Phase I and THE, another 170 from residents of KLL Phase II and Healthy Village Phase I, and the remaining from tenants of Ming Wah Dai Ha, Lai Tak Tsuen and Yue Kwong Chuen. D (EM) of HKHS was confident that sufficient PRH could be made available for re-housing affected families. She added that the monthly rental in respect of the reception estates would not be too high when compared with those of KLL and THE taking into account the improved facilities and layout of these estates.

4. As regards re-housing arrangements for the elderly, ED of HKHS said that the Society recognized the need to provide affordable PRH units to senior citizens and had implemented a number of concessionary housing schemes including those elderly hostels in Tsuen Wan and Kwai Chung districts. These had been well received by tenants concerned and members were welcomed to visit similar accommodation in Healthy Village and Bo Shek Dai Ha. Furthermore, of the 840 new PRH flats to be produced under KLL Phase I redevelopment, a certain number of flats would be set aside for accommodation of elderly households. In order to facilitate a better understanding of the situation, members considered it necessary to have further information on: the rent per square metre of the above estates; the number of affected tenants in KLL and THE who had, in response to the invitation from HKHS, applied to purchase flats under FFSS; and the number of HKHS tenants who had applied to purchase FFSS flats in the Healthy Village Redevelopment Phase II and the consequential number of rental units in the respective estates which would be recovered.

5. In reply to members, the Deputy Secretary for Housing (DS for H) advised that KLL was selected for redevelopment on account of its dilapidated physical condition, albeit being structurally safe. Other factors such as age, facilities and layout of the estate had also been taken into consideration. The impending redevelopment would significantly increase the capacity of KLL and bring about improvement in living conditions. He supplemented that the Administration considered the proposed resettlement within Hong Kong Island by HKHS acceptable. Tenants concerned would be given priority in moving back to KLL upon completion of the redevelopment programme, as in the case of Ka Wai Chuen and Kai Tak Garden.	HKHS
6. While appreciating that affected families would be accorded priority in moving back to KLL, members remained of the view that the Administration should proceed with the redevelopment of KLL and THE only if sufficient PRH flats within the districts could be identified. Some members suggested that HKHS should seek the assistance of the Housing Authority (HA) to make available PRH units to affected tenants, as in the case of redevelopment of Bo Shek Dai Ha. Consideration should also be given to converting sales units in estates such as KLL Phase II and Healthy Village Phase II to rental units. DS for H advised that it might not be possible for HA to assist in re-housing the affected families as suggested by members having regard to the need to meet demand from other re-housing categories, and the requirement to reduce the average waiting time for applicants on the General Waiting List. Members were not convinced that the operation of HA would be affected as HKHS would have to make up for the difference at a later stage. Nevertheless, HKHS tenants had been given ordinary Green Form status in the purchase of flats under the Home Ownership Scheme (HOS) operated by HA. DS for H undertook to relay members concern to HA but cautioned that even if HA could make available the required number of flats for HKHS, these might not be in the same districts as KLL and THE. To facilitate members understanding of the relationship between HKHS and HA, the Administration was requested to provide information on: the number of tenants of HKHS and HA who had purchased flats under FFSS and HOS respectively in the past five years; and the number of applicants on the General Waiting List who had been allocated PRH flats managed by HKHS.	Admin
7. ED of HKHS expressed reservations on the proposed conversion of sales units to rental flats as this would affect the financial situation of HKHS. He emphasized that HKHS was a self-financing organization running on prudent commercial principles; it had to strike a balance between PRH and FFSS projects to ensure that the Society had sufficient funding to finance its future housing projects. He added that not all affected families under the redevelopment programmes required PRH flats, some would purchase flats under FFSS. Members considered a need for the Administration and the HKHS to conduct a survey to ascertain the wish of affected tenants for re-housing, particularly in rental units, and for moving back to the two estates after re-development. ED of HKHS appreciated members suggestion but pointed out that findings of the survey should merely serve as an indicator on housing aspirations of residents concerned; the exact proportion between PRH and FFSS would have to be determined in the context of the Long Term Housing Strategy Review. As regards the level of rents of the two estates after redevelopment, ED of HKHS advised that this had yet to be determined taking into account the cost of construction. The important point was to ensure parity treatment to all HKHS tenants. Having regard to the surge of rents of the Healthy Village upon completion of redevelopment, members emphasized a need for HKHS to provide information on the rents of the two estates for consideration by the Panel and tenants concerned. In reply to a related question, D (EM) of HKHS advised that the minimum allocation standard of seven square metres per person would be adopted in the allocation of PRH units to affected families.	Admin HKHS

8. As to whether HKHS would consider allowing a longer period, say five years as in the case of HA, for redevelopment projects as opposed to the current two years so that both HKHS and residents concerned could have sufficient time to plan ahead for resettlement, D (EM) of HKHS advised that while it was the practice of HA to allow five years for all redevelopment plans, the actual re-housing arrangements would only be effected in the last two years. She supplemented that the two-year redevelopment period currently adopted by HKHS was no more than a schedule which was subject to change according to different circumstances.

9. Some members expressed concern that the redevelopment of Kennedy Town (KT) would aggravate the re-housing problem of KLL and THE. ED of HKHS advised that the redevelopment plan for KT had yet to be finalized but based on past experience of HKHS and the Land Development Corporation, about 70% of affected families preferred ex gratia payment rather than re-housing in HKHS flats. Taking into account the relatively small number of families involved, HKHS was confident that sufficient reception units could be identified to re-house these families, and that the impact on redevelopment of KLL and THE would be insignificant.

10. Members remained unconvinced that the Administration should proceed with the redevelopment of KLL and THE in view of the limited number of reception PRH units available. Dr Hon YEUNG Sum proposed the following motion:

"that the LegCo Panel on Housing urges the Hong Kong Housing Society to freeze the redevelopment programme of Kwun Lung Lau and Tanner Hill Estate before adequate rental units on Hong Kong Island can be made available to re-house affected tenants".

12. While Hon CHAN Yuen-han and Hon CHAN Kam-lam were in support of the motion, they suggested inclusion of such statements as "reasonable and affordable rental units" and "before satisfactory re-housing compensation arrangements are made" in the motion.

13. The Chairman subsequently reworded the motion as follows:

"that the LegCo Panel on Housing urges the Hong Kong Housing Society to freeze the redevelopment programme of Kwun Lung Lau and Tanner Hill Estate before adequate, reasonable and affordable rental units on Hong Kong Island can be made available to re-house affected tenants, and before satisfactory re-housing compensation arrangements are made".

14. The motion was passed by all members who were present at the meeting.

15. Before concluding, the Chairman remarked that the Panel would continue to monitor the progress of the redevelopment programmes of KLL and THE.

II Briefing on Housing (Amendment) (No. 3) Bill 1996 and Housing (Amendment) Bill 1997

(LegCo Paper No. CB(1) 651/96-97(06) - (08))

Housing (Amendment) (No. 3) Bill 1996

16. At the invitation of the Chairman, Hon LEUNG Yiu-chung highlighted the two main features in the Housing (Amendment) (No. 3) Bill proposed by him as follows:

(a) any future determination of variation of the rent of residential units in public housing estates under the control of the HA should take effect three years after the preceding determination or variation; and

(b) the amount of determination or variation of rent should not be greater than one-twelfth of the aggregate of the monthly year-on-year rates of increases, expressed in percentage, in the Consumer Price Index (A) (CPI(A)) within the period of three years ending in the month to which the monthly CPI(A) published nearest in time to the first mentioned determination related.

Mr LEUNG added that the proposed change from a biennial to a triennial rent increase for residential public housing units was modelled after that for commercial premises in PRH estates.

Housing (Amendment) Bill 1997

17. In response to the Chairman, Hon Bruce LIU Sing-lee advised that the objective of his Housing (Amendment) Bill 1997 was for the determination of rent of residential units in PRH estates under the control of HA to be considered by LegCo through subsidiary legislation if the amount of rent determined exceeded the rate of inflation. He supplemented that the rate of inflation should be the percentage equivalent to one-twelfth of the aggregate of the monthly year-on-year rates of increases, expressed in percentage, in CPI(A) within the period:

(a) of such number of months as the number of complete months that fell between the day immediately before that on which the immediately preceding determination took effect and the day on which the first mentioned determination was to take effect; and

(b) ending in the month to which the monthly CPI(A) published nearest in time to the first mentioned determination related.

Mr LIU said that the requirement under his Bill for rent determination to be endorsed by LegCo would ensure proper checks and balances in the operation of HA. Both Messrs LEUNG and LIU considered that the impact of the Bills on HA would be minimal having regard to the sound financial situation of HA which currently had a surplus of $3 billion.

18. In response, DS for H emphasized that tenants affordability was the prime consideration in determining the levels of domestic rent. The median rent-to-income ratios (MRIRs) of 15% and 18.5% currently adopted by HA were indicators of affordability to ensure that rents were maintained at a reasonable level. In fact, the average rental of PRH estates after the recent rent increase exercise only represented a MRIR of about 11% which was far lower than that of 27% in private premises. Furthermore, tenants who faced temporary financial hardship could seek relief in the form of rent reduction through the Rent Assistance Scheme (RAS). DS for H considered the proposed triennial rent review under the Housing (Amendment) (No. 3) Bill undesirable as tenants might find individual rent increases too high having regard to the extended period for increases. The current time frame for rent increase had been widely accepted. He stressed that rental income was a major source of revenue of HA and this was required to finance future housing projects. He also pointed out that HA was likely to incur a deficit of $1.8 billion in 1997/98 and the operation of HA would be adversely affected if the Bills were passed.

19. Some members were not convinced of the Administrations response and pointed out that households receiving rent reduction for two years would have to be transferred to cheaper accommodation which would cause undue disruptions to their daily routines. The Senior Assistant Director (Housing Administration) emphasized that the objective of RAS was to provide assistance to households in temporary financial hardship; it was therefore justified to require tenants in need of long-term assistance to take up cheaper but self-contained accommodation in the same district in order to minimize any disturbances caused.

20. Before concluding, the Senior Assistant Legal Adviser remarked that members should note that the determination date and the effective date of the new rent would be different dates and should not be confused as the same. He would follow up this technical point with the Members in charge. Members agreed that the Bills would be further examined by the Bills Committee to be formed in due course.

III.Any other business

21. There being no other business, the meeting closed at 1:30 pm.

Legislative Council Secretariat
26 February 1997

Last Updated on 20 August 1998