Provisional Legislative Council

PLC Paper No. CB(1) 959

Ref : CB1/BC/5/97

Paper for the House Committee meeting
on 27 February 1998

Report of the Bills Committee on
Housing (Amendment) (No. 3) Bill 1997

Purpose

This paper reports on the deliberations of the Bills Committee on Housing (Amendment) (No. 3) Bill 1997.

The Bill

2. The Bill seeks to amend the Housing Ordinance (Cap. 283) in order to:

1. remove the limit on the number of members of the Appeal Panel that may be appointed by the Secretary for Housing (S for H);

2. provide more specifically that the Housing Authority (HA) may require tenants to pay different rents based on total household income or total household income and assets;

3. empower the Director of Housing (D of H) to delegate his function to assess Prevailing Market Value (PMV); and

4. increase the penalty for supplying false particulars by imposing a fine of treble the amount of rent undercharged as a result of the false particulars.

Background

Making false declaration to the Housing Authority

3. Under the Housing Ordinance, statutory declarations are required from families applying for public rental housing on their eligibility; and families with ten years of residence in public rental housing (PRH) on their income at the beginning of the 11th year and every two years thereafter. If a family’s income exceeds twice the Waiting List Income Limit (WLIL), it is required to pay 1.5 times the net rent plus rates. A family whose income exceeds three times the WLIL is required to pay double net rent plus rates. With effect from 1 April 1997, if the income and the net asset value of a family exceeds prescribed limits, it will be required to pay market rent should it choose to remain in public rental housing.

4. In order to strengthen the deterrent effect against making false declarations on income and assets, the Bill proposes amendments to the Housing Ordinance to provide for an additional fine up to three times the amount of rent undercharged.

Assessment of market value of Home Ownership Scheme and Private Sector Participation Scheme flats

5. Purchasers of Home Ownership Scheme (HOS) and Private Sector Participation Scheme (PSPS) flats may sell or let their flats in the open market after a ten-year resale restriction period, subject to the payment of a premium. The amount of premium is equivalent to the updated value of the original discount and is calculated with reference to the PMV of the property as assessed by D of H.

6. In anticipation of an increase in the number of applications, the Bill provides for the contracting out of premium assessment work to qualified estate surveyors in the private sector.

Membership of the Appeal Panel

7. The Housing Ordinance provides for S for H to appoint a Chairman and 11 other members to the Appeal Panel to hear appeals against termination of leases for public rental and interim housing. It also requires that there must be at least three members attending a hearing each time.

8. In order to increase the capacity of the Appeal Panel in dealing with appeals against termination of leases, the Bill proposes to remove the limit on the number of members of the Appeal Panel that may be appointed by S for H.

The Bills Committee

9. Members agreed at the House Committee meeting on 9 January 1998 to form a Bills Committee to study the Bill. Hon CHAN Yuen-han was elected Chairman of the Bills Committee. Three meetings were held including two with the Administration. The membership list of the Bills Committee is at the Appendix.

Deliberation of the Bills Committee

10. The Bills Committee agrees to remove the limit on the number of members of the Appeal Panel so as to give S for H the flexibility to suitably expand membership to cope with the increased workload. However, reservations have been expressed by some members on the following:

1. the proposal for imposing an additional fine of treble the amount of rent undercharged upon those found guilty of knowingly providing false information when declaring income and assets; and

2. the need to spell out in the Ordinance to empower D of H to delegate his function to assess PMV, since it is already a common practice that government departments contract out various kinds of work to private consultants.

Additional penalty for supplying false particulars

11. Members appreciate the intention behind the proposal for strengthening the deterrent effect against making false declarations to HA. Some members however are not convinced of the need to add a further fine of treble the rent undercharged as a result of the false particulars. They consider that there is no indication showing a trend of increase in the number of false declarations. In 1996, there were only two cases of successful conviction. They are of the view that the existing penalty provision whereby persons found guilty of knowingly making false statements are liable to a fine of $50,000 and imprisonment for six months is sufficient. In view of the fact that in the past five years, the fines for over 90% of the convicted cases were below $12,000 each, some members consider that instead of adding a further fine, the Administration should go for explaining to the Court about the abuse of public housing resources with a view to convincing the Court to pass heavier sentences to offenders under the existing penalty provision; and at the same time launching publicity on the criminal liability of such offences to enhance better deterrent effect.

12. The Administration holds the view that the existing penalties are insufficient to deter false declarations. Although there is at the moment no indication of an upsurge of such offences, an increase in the number of tenants making false declarations is probable with the introduction of the policy on better-off tenants paying market rent on 1 April 1997. The Administration does not want to wait until this proves to be a problem.

13. The Administration explains that the low number of convictions might not reflect the true extent of abuses as the Housing Department can only afford checking tenants’ declarations at random. That apart, it requires considerable time in conducting investigation and collecting evidence. As the policy of requiring better-off tenants to pay market rent has only been implemented for ten months, the number of convictions recorded so far is not a reliable indicator. The Administration therefore considers it necessary to add a further fine of treble the rent undercharged, mirrored on provisions in the Inland Revenue Ordinance, to reflect a co-relationship between the offence and the abuse of public resources and thereby to help the Judge in determining a more appropriate level of sentencing. The failure to add in such a penalty is likely to create a wrong impression that making false declaration to HA is not a serious offence, and will invite further abuse of public housing resources.

14. On enhancement of the deterrent effect, the Administration has considered the alternatives of raising the existing penalty to a fine at level 6 or pursuing false declaration cases under civil law, or simply issuing Notices-to-quit to offenders. Eventually, the Administration recommends the proposed provision on account that the fine will be commensurate with the rent undercharged, i.e. the amount that the offender has profited from the false information. The Administration considers that the proposed amendment can achieve the best deterrent effect.

Assessment of market value of Home Ownership Scheme and Private Sector Participation Scheme flats

15. Members agree to empower D of H to delegate his function to assess PMV to other persons to cope with the increased demand in premium assessment for HOS and PSPS flats. Members also note that the reason for specifying the delegation power of D of H in the Ordinance is that it would save staff resources in scrutinizing the work completed by private estate surveyors in a case by case manner. According to the Administration, the Housing Department will only need to play a monitoring role in the premium assessment process if the assessment work has been delegated, but the ultimate responsibility will still lie on D of H. Adjudication from the Lands Tribunal can still be sought in the event of disputes over the premium assessment.

Conclusions

16. On the offence of making false declarations to HA, some members agree to the Administration’s proposal on the addition of a further fine while some members remain unconvinced of the Administration’s assertions in view of the absence of statistical support to suggest a deteriorating situation, and consider that more effective deterrents are to sentence an offender to imprisonment under the existing provision and to enhance publicity on the criminal liability of such offences.

17. On the proposal to empower D of H to delegate his function to assess PMV, members in general do not raise any objection except that one member has reservation on the necessity to specifically provide a power of delegation for D of H in the Ordinance.

18. The Bills Committee unanimously agree with other proposals in the Bill.

Committee stage amendments

19. Having regard to the different views among Bills Committee members on the proposed amendments, the Bills Committee does not recommend the moving of any Committee stage amendment (CSA). Yet, individual members are considering if they will move CSAs in his/her own capacity.

Recommendations

20. The Bills Committee recommends resumption of Second Reading debate of the Bill on 18 March 1998.

Advice sought

21. Members are invited to support the recommendation at paragraph 20 above.

Provisional Legislative Council Secretariat
25 February 1998

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Appendix

Provisional Legislative Council

Bills Committee on
Housing (Amendment) (No. 3) Bill 1997

Provisional Legislative Council Secretariat
21 January 1998