Provisional Legislative Council
PLC Paper No. CB(1) 265
(These minutes have been seen
by the Administration)
Ref : CB1/PL/HG/1

Panel on Housing

Minutes of meeting held on
Tuesday, 19 August 1997, at 2:30 pm
in the Chamber of the Legislative Council Building

Members present :

Hon CHAN Yuen-han (Chairman)
Hon WONG Siu-yee
Hon HO Sai-chu, JP
Hon Mrs Selina CHOW, JP
Hon CHAN Choi-hi
Hon CHAN Kam-lam
Dr Hon Charles YEUNG Chun-kam
Hon Bruce LIU Sing-lee
Hon LAU Kong-wah
Hon CHOY Kan-pui, JP
Dr Hon TANG Siu-tong, JP
Hon TAM Yiu-chung, JP

Members Attending :
Hon IP Kwok-him

Members absent :

Hon Frederick FUNG Kin-kee (Deputy Chairman)
Hon David CHU Yu-lin
Hon Edward HO Sing-tin, JP
Hon Ronald ARCULLI, JP
Hon CHEUNG Hon-chung
Hon LEUNG Chun-ying, JP
Hon HUI Yin-fat, JP
Hon CHENG Kai-nam
Hon Andrew WONG Wang-fat, JP
Hon Kennedy WONG Ying-ho
Hon Timothy FOK Tsun-ting

Public officers attending :

For items IV and V
Housing Bureau
For item IV
Planning, Environment and Lands Bureau
Planning Department
For Item V
Housing Department

Clerk in attendance :

Miss Becky YU: Chief Assistant Secretary (1)2 (Atg)

Staff in attendance :

Mr Matthew LOO: Senior Assistant Secretary (1)4

I Confirmation of minutes of previous meetings
(PLC Paper Nos. 145, 146 and 147)

The minutes of the meetings held on 22 and 24 July 1997, and of the joint meeting with the Planning, Lands and Works Panel on 24 July 1997 were confirmed.

II Date of next meeting and items for discussion

2. As the Housing Authority (HA) would complete its assessment on the practical and financial difficulties envisaged in implementing the Housing Ordinance in respect of rent increase for residential units in public rental housing (PRH) estates by the end of September 1997, members agreed to postpone the meeting originally scheduled for 15 September 1997 to Monday, 29 September 1997, at 2:30 pm so that they could discuss the assessment in time. The provision of public housing for elderly persons would be another item for discussion.

(Post-meeting note: A special meeting was scheduled for Monday, 15 September 1997, at 2:30 pm to discuss the subjects of "Installation of air-conditioners in public rental housing estates" and "Triad infiltration in the decoration of new public rental housing estates".)

3. The Chairman advised that she would consult Mr Edward HO on the date for the second joint meeting with the Planning, Lands and Works Panel on land supply for the next five years. Members would be informed of the meeting arrangements in due course.

4. Referring to the petition from a coalition of owners of problematic uncompleted properties in the Mainland tabled at the meeting, the Chairman informed members that issues relating to the delay and project failure of overseas uncompleted residential properties had been deliberated by the former LegCo Panel on Housing in the context of the Consultation Paper on the Sales Descriptions of Overseas Uncompleted Residential Properties prepared by the Subcommittee on Description of Flats on Sale of the Law Reform Commission (LRC). A report on the final recommendations was being prepared by LRC taking into account views collated during the consultation period which ended in November 1996. Mr WONG Siu-yee suggested and members agreed that the policy aspect of sales descriptions of overseas uncompleted residential properties should be taken up by the current Panel upon release of the LRC's final report, whereas individual cases should be dealt with by the Complaints Division of the Provisional Legislative Council Secretariat. Some members considered that a case conference between the coalition and the Administration would be useful, and that Mr WONG Siu-yee who was familiar with the subject would be invited to attend the case conference.

(Post-meeting note: The Complaints Division was requested to follow-up on the petition on 20 August 1997.)

III Information paper issued since last meeting

5. No information paper had been issued since last meeting.

IV Pledge for annual provision of 85,000 flats
(PLC Paper Nos. 148 (01) to (03))

6. The Chairman was dissatisfied with the late provision of some of the information papers and emphasized the need for the Administration to make available all papers on time. The Deputy Secretary for Housing (DS for H) explained that the delay was due to the needs for the Housing Bureau (HB) to deal with some urgent matters and to ensure accuracy of information provided. As regards members' remarks that the papers contained limited information, DS for H undertook to provide further information if so required.

Forecast of flat supply

7. Referring to the Annex to PLC Paper No. 148(03), Mrs Selina CHOW considered the estimated supply of 54,000 and 113,000 private and public housing flats respectively for the year 2000/01 unrealistic since this was more than the total flat supply for the years from 1997/98 to 1998/99. She asked if authorities such as the Housing Authority (HA), the Housing Society, and the Real Estate Developers Association (REDA) etc were aware of such an estimate. Mrs CHOW also cautioned that the capacity of the construction industry might not be able to meet the demand for these construction projects. Mr CHAN Kam-lam was also not optimistic that the target supply of 757,000 flats over the eight-year period between 1997/98 to 2004-05 could be met having regard to the lead time of at least three years for the construction of flats. To facilitate members' understanding of the basis for the forecast of supply, Mr CHAN considered it necessary for the Administration to provide information such as the quantity of land disposed of in order to achieve the target, the location and size of these lots of land, the plot ratios, and the deadlines for construction of flats.

8. In response, DS for H explained that the supply of 757,000 flats between 1997/98 to 2004/05 had been projected on the basis of the land disposed of in the few years before 1997/98 and those planned to be disposed of under the Land Disposal Programme recently announced by the Planning, Environment and Lands Bureau. Together with the flat production resulting from private redevelopments, land exchanges, lease modifications as well as public housing developments, the Administration was confident that the target would be achieved. In reply to a member's question on the progress of redevelopment, DS for H advised that with the annual demolition of 10,000 to 13,000 PRH flats under the Comprehensive Redevelopment Programme, it was expected that over 85% of PRH flats under the Programme would be demolished by the year 2001 and the remainder by 2005. The number of private flats demolished each year was about 2,000 to 3,000. DS for H supplemented that the number of flats to be generated from these redevelopments would be subject to plot ratios.

9. As for the capacity of the construction industry, DS for H said that both the public and the private housing sectors should be well aware of the impact of the Land Disposal Programme on the industry, but no indication on any significant shortage of manpower resources had been made so far. To facilitate a better understanding of the situation, the Secretary for Education and Manpower had commissioned a survey to ascertain the needs of the industry and, if necessary, would take early measures as appropriate to alleviate any specific constraints which might arise. HB also held regular meetings with REDA to discuss issues of mutual concern. DS for H undertook to obtain a progress report on the survey from the Education and Manpower Bureau for members' reference.

Lead time for construction of flats

10. The Principal Secretary for Planning, Environment and Lands (Special Duties) (PAS for PEL/SD) reiterated that the Administration was committed to streamlining and speeding up the approval of housing projects. Nevertheless, procedures such as the processing of applications for lease modification and land exchange would take six to 14 months for the former and 14 to 19 months for the latter depending on the complexity of individual cases. Public consultation would also take time. Moreover, property developers concerned would be given another four weeks to consider the new terms and conditions such as land premium imposed by the Valuation Committee/Conference; a longer period would be envisaged if negotiation was required. DS for H supplemented that the Housing Project Action Team (HPAT) under HB had employed a site specific approach to resolve difference in opinions among departments such as the provision of infrastructure and construction of flats. The Steering Committee on Land Supply for Housing was also determined to eliminate all obstacles in order to achieve the production target. PAS for PEL/SD undertook to provide the information which Mr CHAN Kam-lam requested but emphasized that it would take time having regard to the large quantity of data involved.

11. Some members expressed worries that property developers might procrastinate the production of flats through lease modification and land exchange in the event of poor market situation. PAS for PEL/SD explained that in usual cases developers were required under the building covenants to complete the superstructures within a period of three years. An extension to the period might be approved on valid grounds such as unforeseen site difficulties and problems, and such an approval would be subject to payment of fines on a progressive basis based on the prevailing land value. Should there be no progress or should the developer fail to pay the fine, the Director of Lands might exercise the right to re-enter the site in question in accordance with the conditions in the land lease. The Government however did not have the right to re-enter sites of pre-war buildings in view of the absence of building covenants. Some members were concerned that developers would include the fine in the operation cost and thus boost up the flat prices. PAS for PEL/SD explained that the fine had no correlation with property prices as the latter were determined by the demand and supply situation at the time of sale.

Shortfall in flat supply

12. Dr Charles YEUNG Chun-kam noticed that the forecasts of flat supply for the years 1997/98 and 1998/99 had fallen short of the Chief Executive's pledge for annual provision of 85,000 flats by 30,000. He asked if the Administration would consider relaxing the pre-sale period for uncompleted flats so as to alleviate the pressure on housing demand, and if the demand of investors had been taken into account in projecting the overall housing demand. Expressing similar concern on the shortfall, Mr LAU Kong-wah emphasized that the performance in the first three years would be crucial to the success of the 10-year housing strategy. He considered it essential for the Administration to provide a monthly progress report on all public and private housing projects for the period between 1997/98 and 1999/2000 so that members would be well aware of the progress and causes of delay.

13. The Principal Assistant Secretary for Housing (Housing Strategy) (PAS for H/HS) advised that according to the housing demand model operated by the Working Group on Housing Demand, the current flat requirement for the period from 1995/96 to 2005/06 was about 80,000 flats. The pledge for annual provision of 85,000 flats had already provided a safety net for the demand from investors and the vacancy rate remained steady at about 4%. As regards the pre-sale period for uncompleted properties, DS for H advised that this had been relaxed to 15 months recently, and that further relaxation had to be considered carefully to avoid speculation. He however declined to provide a monthly progress report on all housing projects having regard to manpower constraints. Moreover, flat production in the private sector was a matter of commercial decision. DS for H assured the meeting that HPAT and the Steering Committee would closely monitor the situation to ensure timely delivery of flats. To facilitate members' understanding, DS for H undertook to provide an information paper on the work of the HPAT.

Concluding remarks

14. The Chairman was supportive of Mr LAU's request and considered a need for the Administration to provide regular progress reports on housing projects for the first three years starting 1997/98. Mr CHAN Kam-lam remained unconvinced that the production target for the year 2000/01 could be achieved and urged the Administration to explore every means to expedite the flat production in the years preceding 2000/01 in order to meet the production target. DS for H welcomed the member's suggestion and reiterated that the Administration was committed to providing adequate housing flats as pledged.

V Prevailing basis and formula for calculation of the median rent-to-income ratio
(PLC Paper No. 148(04))

15. At the invitation of the Chairman, Mr CHAN Kam-lam said that the subject was raised in the light of the discussion on rent increase for residential units in PRH estates at the meeting on 24 July 1997, during which the Administration indicated that it had difficulties in implementing the Housing (Amendment) Ordinance 1997 in respect of public housing rents. Mr CHAN said that whilst Members of the Legislature could have an open mind on how the legislation should be implemented, the Administration should state the practical and financial difficulties involved. He also dismissed the allegation that the surveys on incomes of all households living in PRH estates referred to in the last paragraph of the information paper would cause disruption to tenants concerned. The important point was to ensure that the median rent-to-income ratio (MRIR) so derived would be fair and fall within tenants' affordability.

16. DS for H reiterated that tenants' affordability was the main consideration in determining public housing rents. Moreover, the Administration had stated its position and difficulties before and after the enactment of the Ordinance. To ascertain the impact of the Ordinance, HA had been requested to carry out a fair assessment on the practical and financial difficulties involved, and to provide a report to the Administration by the end of September 1997. Subject to the findings of the assessment, the Secretary for Housing would make a final decision on the feasibility of implementing the legislation. As to whether the assessment could be expedited, DS for H advised that it would take time for compiling the data having regard to the number of 630,000 PRH households to be surveyed. In reply to a related question, DS for H said that the Administration would only consider commissioning an independent consultancy to conduct the assessment if it was not completely satisfied with the HA's report.

17. Referring to Annex I of the information paper, some members considered a direct comparison between the pattern of household expenditure for tenants living in PRH and those in private rented housing inappropriate having regard to the high property prices and rental values of the latter. They remained of the view that the MRIR of not exceeding 10% provided for under the Ordinance was more acceptable. DS for H clarified that Annex I served only as a useful benchmark for deciding the MRIR ceilings for PRH, and that the current ceilings would not be as low as 15% and 18.5% had a strict comparison been made to the pattern of household expenditure in the private rented sector. PAS for H/HS also pointed out that rents in private tenements were not pegged to the property prices. The Assistant Director (Central Services and Management Policy) (AD/CSMP) supplemented that the average MRIRs in all PRH estates was 9% or 7.3% in older estates.

18. In reply to a member's question on the Rent Assistance Scheme, AD/CSMP advised that 2,721 PRH households were granted rent relief under the Scheme as at 30 June 1997. Of these, only one tenant had been transferred to a cheaper rental housing in the same district.

VI Any other business

19. There being no other business, the meeting ended at 4:40 pm.

Provisional Legislative Council Secretariat
23 September 1997

Last Updated oon 24 October 1997

Panel on Housing

Minutes of meeting held on Tuesday, 19 August 1997, at 2:30 pm in the Chamber of the Legislative Council Building

Minutes of meeting held on
Tuesday, 19 August 1997, at 2:30 pm
in the Chamber of the Legislative Council Building