Panel on Housing (Minutes) 28 Oct 97

Provisional Legislative Council

PLC Paper No. CB(1) 652
(These minutes have been
seen by the Administration)

Ref : CB1/PL/HG/1

Panel on Housing

Minutes of meeting held on Tuesday, 28 October 1997, at 10:45 am in the Chamber of the Legislative Council Building

Members present :

Hon Frederick FUNG Kin-kee (Deputy Chairman)
Hon HO Sai-chu, JP
Hon Edward HO Sing-tin, JP
Hon Mrs Selina CHOW, JP
Hon Ronald ARCULLI, JP
Hon HUI Yin-fat, JP
Hon CHAN Choi-hi
Hon CHAN Kam-lam
Hon CHENG Kai-nam
Hon Andrew WONG Wang-fat, JP
Hon Kennedy WONG Ying-ho
Hon Bruce LIU Sing-lee
Hon CHOY Kan-pui, JP
Dr Hon TANG Siu-tong, JP

Member attending :

Hon CHAN Wing-chan

Members absent :

Hon CHAN Yuen-han (Chairman)
Hon WONG Siu-yee
Hon David CHU Yu-lin
Hon CHEUNG Hon-chung
Hon LEUNG Chun-ying, JP
Dr Hon Charles YEUNG Chun-kam
Hon LAU Kong-wah
Hon Timothy FOK Tsun-ting
Hon TAM Yiu-chung, JP

Public officers attending :

For all items

Housing Bureau

Mr Andrew R Wells,: Deputy Secretary for Housing (2)

For item IV

Housing Department

Mr Stephen S C POON,: Deputy Director of Housing/Works

For item V

Housing Department

Mr Joseph K C LEE,: Assistant Director/Management (2)
Mr S Y MA,: Chief Manager/Management (NTE)
Mr S T CHEN,: Chief Maintenance Surveyor/Estate Minor Maintenance

Clerk in attendance :

Ms LEUNG Siu-kum,: Chief Assistant Secretary (1)2

Staff in attendance :

Miss Becky YU,: Senior Assistant Secretary (1)3

In the absence of the Chairman, who was on sick leave, Mr Frederick FUNG Kin-kee took the chair in the ensuing meeting.

I. Confirmation of minutes of previous meeting
(PLC Paper No. CB(1) 382)

2.The minutes of the meeting held on 15 September 1997 were confirmed. II.Date of next meeting and items for discussion

3.The next meeting would be held on Monday, 17 November 1997, at 2:30 pm to discuss the following items:

-Quality of flats under subsidized home ownership schemes and the responsibility of Housing Authority; and

-Sale of overseas uncompleted residential properties.

Second joint meeting with the Panel on Planning, Lands and Works
(PLC Paper No. CB(1) 327)

4.Mr Edward S T HO, who was also the Chairman of the Panel on Planning, Lands and Works, advised that following the joint meeting held on 24 July 1997 relating to the land supply for the next five years, the second joint meeting on review of the development approval process had been scheduled for Friday, 28 November 1997, at 10:45 am.

(Post-meeting note: The meeting had been re-scheduled to Tuesday, 2 December 1997, at 10:45 am.)

III. Information paper issued since last meeting
(PLC Paper No. CB(1) 284)

5.Members took note of the views of a deputation and the Administration's response to the proposed expansion of the Neighbourhood Level Community Development to old urban areas and interim housing circulated vide PLC Paper No. CB(1) 284. The Chairman suggested and members agreed that it would be more appropriate for the Panel on Welfare Services to follow-up on the subject, with members of the Panel on Housing to take part in the discussion by invitation.

IV. Sale of public rental flats
(PLC Paper No. CB(1) 383(01) and (02))

6.The Deputy Secretary for Housing (DS for H) and the Deputy Director of Housing/Works (DD of H/W) explained that the proposal to sell public rental housing (PRH) flats to existing tenants at affordable prices was announced in the Long Term Housing Strategy Review Consultative Document released in January 1997. According to views collected during the public consultation period, there had been support from different sectors in the community for the launching of such a scheme. Over 70% of tenants in some districts had also indicated interest in buying their own PRH flats. Although operational details for the Sale of Public Rental Housing Flats to Existing Tenants Scheme (SPRHFETS) had yet to be worked out by the Housing Authority (HA), the principle was to ensure that the price of flats sold under the scheme was set at a level which was both attractive to the prospective buyers and fair to the general community. Subject to the availability of operational details, the Administration would finalize an implementation plan by the end of 1997 with a view to releasing the first batch of about 25,000 PRH flats for sale in early 1998.

7.Members were dissatisfied with the lack of concrete implementation details presented to the Panel for deliberation. They considered that the Administration should at least provide them with different options which were being considered and the pros and cons of each of the options. DD of H/W explained that the Housing Department (HD) was still considering public views on issues such as sale prices, resale conditions and mortgage arrangements. The final report would be submitted to HA for approval in December 1997. As to whether the Administration would release the operational details in phases, DS for H advised that this would have to be decided by HA.

Policy direction

8.A member expressed worries about the possibility that PRH would not be built after the implementation of SPRHFETS, and that future emphasis would be focused on subsidized home ownership flats. DS for H responded that SPRHFETS was one of the plans to realize the Chief Executive's housing target of achieving 70% home ownership rate by the year 2007. Other initiatives would include building more subsidized flats under the Home Ownership Scheme (HOS) and the Private Sector Participation Scheme and allowing families on the General Waiting List and other prospective PRH tenants the option of buying rather than renting PRH flats when their turn for flat allocation came up. He however stressed that the Administration was committed to providing PRH to those who could not afford any other type of housing.

9.Noting that the two pilot schemes to sell PRH flats introduced by HA in 1991 and 1993 lacked public support, members were not optimistic that the current SPRHFETS would be welcomed by tenants concerned. They enquired about the improvement measures in place to ensure the viability of SPRHFETS. DS for H advised that the pilot schemes were not attractive to prospective buyers because-

the price of flats was set too high when compared to prevailing rents;
resale restrictions were too stringent;
choice of PRH blocks was limited; and
minimum ratio of flats set to be sold in each designated PRH block was too high.

In respect of the (d) above, DD of H/W added that a benchmark of 50% had been set for each of the 11 PRH blocks allocated for sale in 1991 and 30% for the 18 PRH blocks in 1993. DS for H assured members that HA would take account of past experience in finalizing SPRHFETS. Improvement measures such as increasing the number of PRH blocks for sale and lifting the minimum ratio were being considered. The Administration was confident that the final package would be both affordable and attractive to tenants concerned.

10.In response to the Administration's explanation, Mr CHENG Kai-nam made the following counterproposals for SPRHFETS -

the price of flats should not be higher than $300,000;
mortgage arrangements should not be inferior to that of HOS;
resale conditions should not be stricter than that of HOS;
structural guarantee period should not be less than three years;
restriction on the number of flats to be sold in each designated PRH block should not exist;
household expenses of PRH owners should not exceed their affordability; and
status of tenants who refused to buy PRH flats should not be affected.

Expressing similar concern on owners' affordability, Mr CHAN Wing-chan urged the Administration to seriously consider the Hong Kong Federation of Trade Unions' proposal of allowing tenants who wished to buy PRH flats to pay rents in lieu of monthly instalments. DS for H noted members' suggestions and assured members that the Administration would take into account all views expressed before taking a final decision on SPRHFETS.

11.As regards the plan to sell 25,000 PRH flats in 1998, DD of H/W clarified that the Administration aimed at offering a minimum of 25,000 existing PRH flats to tenants who might wish to buy their own flats. The number of flats to be made available for sale would subject to the acceptability of the Scheme. In view of the recent downturn in the property market, a member pointed out that the sale of 25,000 PRH flats would further aggravate the situation. He asked if the Administration would re-consider the time-table for SPRHFETS. DS for H explained that the sale of PRH flats was different from that of private flats as prospective buyers of PRH flats were limited only to sitting tenants, and that the impact of SPRHFETS on the property market would be minimal. The Administration would be cautious in select an appropriate time for implementing SPRHFETS.

Sale price of PRH flats

12.Members' views were divided on using replacement cost as the basis for calculating the price of PRH flats. Mrs Selina CHOW said that the Liberal Party was opposed to such an arrangement. Mr Edward S T HO was of the view that apart from replacement cost, the Administration should consider other pricing basis such as construction cost. While supporting the use of replacement cost, the Chairman pointed out that the replacement cost of $0.4 million as quoted in the Administration's information paper appeared to be too high. In reply, DS for H advised that according to public views collated, including those from the Provisional District Boards and various political parties, there had been general support for the use of replacement cost as the pricing basis for PRH flats. DD of H/W emphasized that tenants' affordability would remain the prime consideration in determining the price of PRH flats, and that HA would take into account all options on pricing basis such as the use of construction cost and HOS practices before taking a final decision. As regards the replacement cost of $0.4 million quoted for one particular flat, DS for H clarified that this was used for reference only. Adjustments to reflect location, age and other relevant factors would have to be made.

13.As the price of PRH flats was crucial to the success of SPRHFETS, Mrs CHOW considered that there was a need for a market survey to ensure that the set price was attractive to the tenants. DD of H/W reiterated that the sale of PRH flats was different from that of HOS or private flats as the prospective buyers were limited to sitting tenants only. Given the close contact between HD staff and the tenants, he was confident that HD had good understanding of tenants' housing aspirations and affordability.

Mortgage arrangements

14.Some members remarked that tenants would not be interested in buying PRH flats if the monthly instalments were too high when compared with the prevailing rents. DD of H/W acknowledged members' concern and advised that a comparison table on the amount of rents and instalments payable would be compiled after details of mortgage arrangements had been worked out between HA and interested financial institutions. As regards the possibility of re-housing back to PRH in the event that owners failed to repay mortgage loans due to financial difficulties and of providing mortgage loans to PRH buyers direct, DS for H advised that these had to be considered carefully in view of the financial and policy implications.

Resale conditions

15.The Chairman cautioned that the secondary market of HOS flats would be unduly affected if the Administration allowed flats under SPRHFETS to be re-sold in the open market, in particular on those Harmony PRH blocks which had turned into HOS. DS for H took note of the Chairman's views but advised that there was no plan at present to make Harmony available for sale under SPRHFETS. As regards the question of land premium, DS for H said that this would be further discussed with HA.

Condition of PRH flats

16.Some members considered that only PRH flats aged less than 10 years should be put up for sale, and that essential renovation works including the replacement of pipes and electric lines should be carried out before sale. They also considered that measures should be mapped out to ensure the quality of flats within a post-sale period. DS for H welcomed members' views and assured members that HA would work out the relevant details.

Concluding remarks

17.In view of the importance of the subject, members considered it essential for the Administration to brief the Panel again as soon as the operational details were available. DS for H said that he would work out the time-table with the Chairman.

V. Updated development of the enforcement exercise against unauthorized installation of air-conditioners in public rental housing estates
(PLC Paper No. CB(1) 383(03))

18.At the invitation of the Chairman, the Assistant Director/Management(2) (AD/M(2)) briefed members on the latest development of the enforcement exercise against unauthorized installation of air-conditioners (A/Cs) in public rental housing estates. At present, about 82% of the cases of unauthorized installations in the first phase of the exercise had been resolved. For the remaining 10,000 outstanding cases, most of the tenants were prepared to rectify their installations. The Housing Department (HD) was confident that the first phase of the exercise would be completed in March 1998 as scheduled.

19.Noting that the rectification cost had been boosted up to $3,000 by registered technicians due to heavy demand, a member urged HD to extend the grace period to alleviate the pressure on tenants concerned. She also sought clarification on the circumstances under which Notices-to-Quit (NTQ) would be served. AD/M(2) advised that NTQ would only be served on those persistent tenants who unreasonably refused to rectify their unauthorized installations. Tenants who could demonstrate that registered technicians had been arranged for rectification works beyond the grace period would not be subject to NTQ. So far, no NTQ had been served in relation to installation of A/Cs.

20.As regards the workability of lateral installation hoods, the Chief Maintenance Surveyor/Estate Minor Maintenance (CMS/EMM) explained that this was a common ventilation method adopted by the Works Bureau. To facilitate a better understanding, a mock-up was being constructed and a display would be arranged at Chuk Yuen Estate at the end of October 1997. In addition, a number of licensed contractors had been asked to quote the price for installing these hoods. The illustrative drawing on the method and a price list would be made available for tenants' reference at all estate offices. At members' request, CMS/EMM undertook to provide information on the locations at which A/Cs were installed using lateral installation hoods.

Admin

21.Some members were not optimistic that tenants would be interested in the installation of lateral hoods as these would diminish the usable area of balconies. They remained of the view that danger caused by protruding A/C units would be reduced if they were installed in such a way that their centres of gravity fell within the flats. CMS/EMM explained that in the majority of non-compliance cases, the balconies were enclosed with aluminum windows installed by tenants concerned. These windows might not be able to support a protruding A/C, particularly during typhoon seasons. While recognizing the Administration's concern about tenants' self-installed windows, the Chairman considered that A/Cs installed on shelves fastened to the ceiling of balconies with part of the A/Cs protruding outside the buildings should be allowed as the ceiling should be strong enough to withstand the pressure. AD/M(2) agreed to re-examine the Chairman's proposal.

Admin

22.In reply to a related question, AD/M(2) said that HD had considered all counterproposals put forward by tenants and had worked out a number of alternative installation methods accordingly. HD would continue to adopt a flexible approach in dealing with cases of unauthorized installations with a view to minimizing inconvenience caused to tenants. At members' request, the Administration undertook to provide a set of these alternative methods.

Admin

VI. Any other business

23.There being no other business, the meeting ended at 1:00 pm.

Provisional Legislative Council Secretariat
12 December 1997