Legislative Council

LC Paper No. CB(1) 1122/98-99
(These minutes have been seen
by the Administration)

Ref: CB1/PL/HG/1

Members present :

Hon LEE Wing-tat (Chairman)
Hon Gary CHENG Kai-nam (Deputy Chairman)
Hon HO Sai-chu, JP
Hon Albert HO Chun-yan
Hon LEE Cheuk-yan
Hon Fred LI Wah-ming
Hon NG Leung-sing
Hon Ronald ARCULLI, JP
Hon CHAN Yuen-han
Hon CHAN Kam-lam
Hon LEUNG Yiu-chung
Dr Hon YEUNG Sum
Hon Andrew CHENG Kar-foo
Hon SZETO Wah
Hon TAM Yiu-chung, JP

Member attending :

Hon LAU Chin-shek

Members absent :

Hon David CHU Yu-lin
Hon Edward HO Sing-tin, JP
Hon Mrs Selina CHOW LIANG Shuk-yee, JP
Hon James TO Kun-sun
Hon Christine LOH
Hon Andrew WONG Wang-fat, JP
Hon LAU Kong-wah
Hon Timothy FOK Tsun-ting, JP

Public officers attending :

For item IV

Housing Bureau

Miss Sandy CHAN

Principal Assistant Secretary
(Public Housing)

Housing Department

Mr Marco WU

Deputy Director (Management)

Mr FUNG Ho-tong

Acting Business Director
(Commercial & Services)

For Item V

Housing Bureau

Miss Sandy CHAN

Principal Assistant Secretary
(Public Housing)

Housing Department

Mr FUNG Ho-tong

Acting Business Director
(Commercial & Services)

Mr WONG Chi-ching

Senior Housing Manager/Agency

Clerk in attendance :

Ms LEUNG Siu-kum

Chief Assistant Secretary (1)2

Staff in attendance :

Ms Pauline NG

Assistant Secretary General 1

Miss Becky YU

Senior Assistant Secretary (1)3

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I Confirmation of minutes of previous meeting
(LC Paper No. CB(1) 782/98-99)

The minutes of the meeting held on 22 December 1998 were confirmed.

II Information paper issued since last meeting

2. Members noted that the following information papers had been issued since the last meeting on 4 January 1999:

LC Paper No. CB(1) 783/98-99	-	Submission from the Joint Group for Fighting for Authorized Installation of Air-conditions;
LC Paper No. CB(1) 784/98-99	-	Submission from the Joint District Association to Fight for the Addition of Family Members to Public Rental Tenancies of Single Elderly Tenants;
LC Paper No. CB(1) 817/98-99	-	Information paper provided by the Administration on a proposal to create a permanent post of Chief Town Planner to head a dedicated Housing Task Force in the Planning Department;
LC Paper No. CB(1) 818/98-99	-	Letters from a Wong Tai Sin Provisional District Board member;
LC Paper No. CB(1) 823/98-99	-	Further submission from the Joint District Association to Fight for Addition of Family Members to Public Rental Tenancies of Single Elderly Tenants; and
LC Paper No. CB(1) 828/98-99	-	Information paper provided by the Administration on the resale restrictions for Housing Authority subsidized home ownership schemes.

III Date of next meeting and items for discussion

3. The next meeting would be held on Monday, 1 March 1999, at 4:30 pm to discuss the following:

- Addition of family members to public rental housing tenancies of single elderly tenants and size of 1-2 person flats for elderly households;

- Tendering and monitoring systems for quality assurance of building works of the Housing Authority; and

- Funding support for demolition of Cottage Areas.

IV Policy on transfer of public rental housing tenancies to second generation
(LC Paper No. CB(1) 822/98-99(01))

4. Ms CHAN Yuen-han considered it inappropriate for the Administration to indiscriminately require the second generation households failing the comprehensive means test (CMT) to move out of their public rental housing (PRH) flats without having regard to the different circumstances under which they were first admitted to PRH. She pointed out that there had been cases where PRH flats were offered as a form of compensation to residents affected by clearance of squatter and cottage areas for land resumption. Residents concerned should have an indefinite right to stay in PRH. The Deputy Director (Management) (DD/M) responded that similar views had been examined in the course of formulation of the "Policy on Safeguarding Rational Allocation of Public Housing Resources" (SRA) in 1996. Consideration had been given to the fact that if clearance of squatters on private land was required under the Lands Resumption Ordinance, the Government would fully compensate legal owners of the land and properties with cash. In fact, all eligible residents in past clearance operations had received their compensation. Squatters on government land however were not eligible for any compensation upon clearance because they were not owners of the land. Nevertheless, as it was a government policy that no one would be rendered homeless as a result of government clearance operations, those affected would be offered PRH flats if they met the prevailing eligibility criteria. This was to take account of their housing need and by no means a form of compensation. The Principal Assistant Secretary for Housing (PAS for H) added that CMT was necessary to determine the eligibility of second generation households to continue to receive public housing subsidy. As those with income and net assets exceeding the CMT limits should be able to take care of their housing need, they should be required to vacate their PRH flats for re-allocation to other needy families to ensure an equitable allocation of public housing resources. Ms CHAN however remained of the view that the Administration should take into account the different origin of PRH households in considering the policy on transfer of PRH tenancies.

5. Regarding the policy on transfer of public rental housing (PRH) tenancies to the second generation, Mr CHAN Kam-lam pointed out that PRH tenants had already been required to pay extra rent or to move out if their family income exceeded the prescribed limits under SRA. He considered that it was not an issue of inheritance of PRH tenancies, but rather the requirement for undergoing CMT, covering both income and net assets. As such, he urged the Administration not to put the two issues together when discussing the policy on transfer of PRH tenancies.

6. Mr LEE Cheuk-yan also remarked that if the Housing Authority (HA) was ready to adopt a lenient approach and applied the same income and assets limits set under SRA targeted at well-off tenants to the second generation households, the policy on transfer of PRH tenancies was in fact SRA, only that the well-off second generation households concerned had to vacate their PRH flats within one year's period. DD/M however advised that the policy on transfer of PRH tenancies was mainly targeted at the second generation of deceased principal tenants while SRA was applied to tenants who had been living in PRH for ten years or more. Responding to the Chairman's enquiry, DD/M advised that there were in total about 1,500 PRH households paying double net rent and market rent plus rates. Although the number of households applying for transfer of PRH tenancies might not be too many, DD/M stressed that it was important to establish a rational policy.

7. Mr LEUNG Yiu-chung considered it unfair that well-off tenants paying market rent under SRA were allowed to continue to live in PRH and to apply for rent reduction if their household income fell below the prescribed limits for three consecutive months while second generation households which failed CMT had to vacate their PRH flats within a period of one year. They would have to re-apply for PRH if their financial situation deteriorated after the one-year period. DD/M replied that the proposed limits for the policy on transfer of PRH tenancies were set at three and 102 times the Income Limits and Net Asset Limits for Waiting List applicants respectively. Households with income and asset exceeding these limits already represented the top 8% income group in Hong Kong and top 1% of the PRH population. They should be able to take care of their housing needs even if there was a slight drop in the overall household income. The Business Director (Commercial & Services) (Acting) (BD/C&S (Ag)) added that consideration was being given to require well-off tenants to move out of PRH as well. Mr LEUNG expressed worries that HA would further lower the income and asset limits in the future to force more second generation households out of PRH. In response, DD/M emphasized that the requirement for CMT was not new. In the past, second generation households were required to undergo an income test to determine the rent payable upon the grant of new PRH tenancies. The inclusion of an asset test in CMT now was to ascertain their eligibility to continue to receive public housing subsidy. He assured members that HA would keep the existing housing policy under constant review to take account of the changing circumstances.

8. Dr YEUNG Sum also questioned the inconsistency between the arrangements to remove second generation households which failed CMT from PRH within a period of one year and to allow better-off tenants under SRA to purchase their PRH flats through the Tenants Purchase Scheme (TPS). DD/M advised that the second generation households concerned were also eligible to buy their PRH flats if they were put up for sale under TPS within the one-year grace period. However, they would not be entitled to the special discounts under TPS. DD/M further advised that apart from TPS, second generation households would be given opportunities to acquire their own homes through various subsidized home ownership schemes and loan schemes by means of the Green Forms. Those with no private domestic properties would be accorded "first priority" in selecting Home Ownership Scheme (HOS)/Private Sector Participation Scheme (PSPS) flats; "first priority" in purchasing HOS/PSPS flats in the secondary market; or interest-free loans under the Home Purchase Loan Scheme (HSLS). DD/M added that households with private domestic properties would not be eligible for these priority schemes as they did not have an urgent need for shelter. The Chairman however questioned the rationale for such an arrangement since there should not be any difference, as far as financial well-being was concerned, between households with private domestic properties and those without properties but in possession of other assets of equivalent value. Dr YEUNG remained dissatisfied with the TPS arrangement for second generation households since they were deprived of an opportunity to purchase their PRH flats despite these flats had been scheduled for sale within one or two years after their removal.

9. Mr Fred LI considered that CMT was being used to force second generation households to buy HOS/PSPS flats given the recent poor response to these Schemes. In reply, DD/M emphasized that the Administration had no intention to force these households to become home owners. The objective of CMT was to ensure that PRH was given on the basis of genuine need. Those with income and assets exceeding the CMT limits were encouraged to acquire their own homes so as to vacate the PRH flats for re-allocation to other needy families. Mr Albert HO expressed concern that members of the second generation households concerned might not prefer living together after removal from PRH. Given the different financial situation of individual household members, those who could not afford to acquire their own homes or rent private accommodation would have to re-apply for PRH. For others who chose to buy HOS/PSPS flats, they could never apply for PRH again even if their financial situation deteriorated since ex-owners of HOS/PSPS flats and ex-HSLS recipients were not eligible to apply for PRH. To address the problem, Mr HO urged HA to consider allowing second generation households to buy their PRH flats even if these flats were not included for sale under TPS. DD/M said that it was technically not feasible to sell individual PRH flats not included in TPS. He added that separation of household members was not uncommon in the event of changes in family circumstances. For example, under the existing policy, the spouse of one of the principal tenant's married children (also an authorized occupant of the flat) could be added to the tenancy to allow for a one-line continuation of the family. However, the tenant's other children would have to move out upon marriage. Mr HO remarked that a direct comparison between removal from PRH as a result of marriage and upon the death of the principal tenant and spouse was inappropriate as the former could be planned ahead while the latter was usually unexpected.

10. As regards the grace period granted to second generation households failing CMT to move out of PRH, PAS for H advised that the Administration had considered different views and concluded that the proposed duration of one year was suitable to allow adequate time for the households concerned to make necessary removal arrangements on the one hand and to ensure that the PRH flats were made available for re-allocation in good time on the other. While agreeing with the need to ascertain the eligibility of sitting tenants to continue to receive public housing subsidy given the limited public housing resources and the large number of applicants on the Waiting List, Mr NG Leung-sing was of the view that the one-year period within which second generation households could acquire HOS/PSPS flats was too short, particularly when there were limited choices of such flats available. He asked if HA would consider allowing the households concerned to retain their "first priority" status for two to three years so that they could buy HOS/PSPS flats in subsequent phases. DD/M advised that HOS/PSPS buyers with "first priority" status should have no problem in selecting their flats within one year's time. Nevertheless, he undertook to reflect Mr NG's suggestion to HA and to consider if Green Form buyers of uncompleted HOS/PSPS flats should be allowed to continue to live in their PRH flats until the HOS/PSPS flats were ready for occupation.

Admin

V Management fees of Home Ownership Scheme estates
(LC Paper Nos. CB(1) 822/98-99(02) to (04))

11. BD/C&S (Ag) advised that if there was no owners' corporation (OC) in an HOS estate, HA would exercise the powers and duties conferred to it under the deed of mutual covenant to appoint a private management agent (PMA) to manage the estate and to supervise the performance of the PMA on behalf of the owners. HA would collect from the owners concerned a supervision cost to recover the administration overheads and staff costs incurred.

12. Some members noted that both the supervision cost charged by HA and the remuneration for PMAs formed part of the management fee for HOS estates. They expressed concern that HOS owners would be vulnerable to double charging in term of administration cost. Mr HO specifically questioned the rationale for charging a supervision cost of around $30 per flat on top of the remuneration of around $20 per flat for PMAs, in particular when the actual management work was undertaken by PMAs. In reply, BD/C&S (Ag) emphasized that the supervision cost was charged on a cost basis to recover the recurrent operating costs of the Housing Department (HD) staff in supervising the performance of PMAs in the management of HOS estates, and other duties still undertaken by HD such as structural repair, maintenance of slopes etc. Nevertheless, HD acknowledged the need to contain its overhead costs and had successfully maintained the supervision cost at the existing level of $30.30 per flat for 1999/2000. BD/C&S (Ag) added that despite the inclusion of supervision cost, the overall management fee for HOS estates was lower than that of their counterparts in the private sector. Mr HO however considered that a direct comparison of management fee between HOS and private residential estates was inappropriate since the latter did not have a multiple fee structure. He was of the view that HD should further streamline its staffing structure with a view to reducing the supervision cost. Mr Andrew CHENG suggested that supervision costs should be determined at different levels for different HOS estates to take into account their individual circumstances, such as the number of blocks within an HOS estate and the existence of slopes. The Chairman also requested HD to consider keeping separate management accounts for each HOS estate. BD/C&S (Ag) noted members' views and undertook to review the structure of the management fee for HOS estates.

Admin

13. Mr LEUNG expressed concern that HD housing managers might not have sufficient time to monitor the performance of PMAs for HOS estates if they had to manage PRH estates as well. To ensure service quality, the Chairman asked if HA would consider designating a housing manager to be held solely responsible for all HOS estates. In reply, BD/C&S (Ag) explained that under the concept of regionalization, housing managers were deployed to manage both PRH and HOS estates within the same district to optimize the use of resources. He nevertheless assured members that HD had set a fixed manning scale for supervising the management and administration of HOS estates by PMAs. To facilitate members' understanding, the Administration undertook to provide information on the time spent by HD staff in supervising the performance of PMAs for HOS estates.

Admin

14. As to whether there was any mechanism through which HOS owners could discharge HA from carrying out its supervisory duties, the Senior Housing Manager/Agency explained that before owners concerned had set up their OCs, HA was the only body corporate empowered under the Building Management Ordinance to deal with legal issues such as entering into management contract with PMAs and carrying out litigation on behalf of HOS owners. As such, there was no mechanism through which HOS owners could discharge HA from being the estate manager. Notwithstanding, HA had been encouraging HOS owners to set up OCs and take up the management of their properties so that the supervision cost charged by HA could be saved.

VI Study on bedspace apartments and related issues
(LC Paper No. CB(1) 692/98-99(07))

15. At the invitation of the Chairman, the Assistant Secretary General 1 advised that pursuant to members' request, the Clerk had prepared the paper on "Bedspace Apartments: Regulation of the building and fire safety aspects of bedspace apartments (BSAs) and related issues". The paper set out the areas of concern raised at various meetings and yet to be addressed by the Administration as well as new issues such as re-housing for lodgers concerned and the problem of cubicle apartments. To further study the subject of the regulation of BSAs, a more in-depth research might be required to find out the experience of other populated cities in providing the standards for private dwellings of low income group, in particular for rented dwellings for singletons or single elderly persons.

16. Members generally agreed with the need for a research project as proposed in the Appendix to the paper. In conducting the study, reference should be made to overseas cities with similar background to Hong Kong, such as Chicago and Japan. Apart from the research project, members considered that the Administration should be invited to respond to the issues outlined in paragraph 35 of the paper and the motion on re-housing all cage home lodgers and single persons passed on 14 October 1998. Mr LAU Chin-shek remarked that the Panel should also invite views from various voluntary agencies concerned with BSAs.

(Post-meeting note: Letters to a number of voluntary agencies suggested by Mr LAU and to the Administration were issued on 4 and 8 February 1998 respectively.)

VII Any other business

17. There being no other business, the meeting ended at 6:30 pm.

Legislative Council Secretariat
16 April 1999