LC Paper No. CB(1) 279/99-00
(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, JP (Deputy Chairman)
Hon David CHU Yu-lin
Hon HO Sai-chu, SBS, JP
Hon Edward HO Sing-tin, SBS, JP
Hon Albert HO Chun-yan
Hon Fred LI Wah-ming, JP
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, GBS, JP

Members absent :

Hon LEE Cheuk-yan
Hon Mrs Selina CHOW LIANG Shuk-yee, JP
Hon James TO Kun-sun
Hon Andrew WONG Wang-fat, JP
Hon LAU Kong-wah
Hon Timothy FOK Tsun-ting, SBS, JP

Public officers attending :

For item IV

Housing Bureau

Miss Sandy CHAN,

Principal Assistant Secretary for Housing

Mr Y C LAI,

Assistant Secretary for Housing

Miss Cindy KWAN Yuen-ching,

Assistant Secretary for Housing

For Item V

Housing Bureau

Miss Sandy CHAN,

Principal Assistant Secretary for Housing

Housing Department

Mr Y K CHENG,

Assistant Director/Applications and Home Ownership

Home Affairs Bureau

Mr Francis LO,

Principal Assistant Secretary for Home Affairs (5)

Home Affairs Department

Miss Angela LUK,

Assistant Director (Special Duties)

Mr H K YUEN,

Chief Officer (Licensing Authority)

Attendance by invitation :

For item IV

Hong Kong Housing for the Sandwich Class

Mr Bill LAY Yan-piau
Ms HO Kim-ling

Hong Kong Housing Society

Miss L C WONG,

Executive Director (Acting)

Mr Francis LAW,

Director (Planning & Development)

For Item V

The Joint Concern Group on Problems Arising from Bedspace Apartments

Miss WONG Shek-hung
Mr LI Ting-ho
Mr SHEK Kam-ming
Mr LAU Kim-fung
Mr Stephen SHIH Chi-wai

The Salvation Army

Mrs Victoria KWOK,

Senior Administrator

Agency for Volunteer Service

Mr K K CHAN,

General Secretary

Mr S W LO,

Singleton Hostel Manager (Singleton Hostel Service)

Clerk in attendance :

Ms LEUNG Siu-kum,

Chief Assistant Secretary (1)2

Staff in attendance :

Ms Pauline NG,

Assistant Secretary General 1

Ms Eva LIU,

Head (Research and Library)

Miss Becky YU,

Senior Assistant Secretary (1)3

Mr Jackie WU,

Research Officer 1

I Confirmation of minutes of previous meeting
(LC Paper No. CB(1) 1635/98-99)

The minutes of the meeting held on 30 March 1999 were confirmed.

II Information paper issued since last meeting

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

LC Paper No. CB(1) 1596/98-99 - Submission from the Concern Group on the Sale of Wah Ming Estate under the Tenants Purchase Scheme (TPS) and the Administration's response regarding requests for replacement of existing water pipes by copper pipes before the estate was put up for sale and for exemption of maintenance fee from TPS purchasers for the rooftop playground in Wah Ming Estate;

LC Paper No. CB(1) 1624/98-99 - General Housing Policies on Application for Public Housing and Home Ownership Scheme, Estate Management, Squatter Control and Clearance (December 1998) published by the Housing Department (HD); and

LC Paper No. CB(1) 1639/98-99 - PSI Update published by HD on private sector involvement in HD's services.

III Date of the special meeting and items for discussion

3. The Chairman reminded members of the special meeting scheduled for Monday, 12 July 1999, at 4:30 pm to discuss the subjects on "Use of recreational areas for construction of public housing blocks", "Affordability of tenants in public rental housing estates" and "Cessation of 'tenants to pay repair services' scheme provided by the Housing Department".

IV Sandwich Class Housing Scheme

Meeting with the Hong Kong Housing for the Sandwich Class
(LC Paper No. CB(1) 1644/98-99(01)

4. Mr Bill LAY opined that the Hong Kong Housing Society (HS) should provide a full buy-back guarantee for flats under the Sandwich Class Housing Scheme (SCHS) so that purchasers experiencing genuine financial difficulties amid the economic downturn could resell their flats back to HS at original prices. As regards SCHS buyers who had signed an Agreement for Sale and Purchase (ASP) but did not complete the transaction, he did not agree that the Administration should consider them as having owned properties and hence could not enjoy other subsidised housing benefits in future. He was of the view that the Administration should relax the property ownership restriction rule to enable defaulted SCHS buyers to apply for other subsidised housing schemes. He also considered that HS should consult previous SCHS buyers before setting the sales prices for the remaining flats. He further suggested that there should be a representative of SCHS owners elected through open nomination in the Executive Committee of HS.

Meeting with the Administration
(LC Paper No. CB(1) 1644/98-99(02))

5. On buy-back guarantee, Dr YEUNG held the view that as both the Home Ownership Scheme (HOS) and SCHS were subsidized housing schemes, the same full buy-back guarantee under HOS should similarly apply to SCHS. The Principal Assistant Secretary for Housing (PAS for H) advised that although HOS and SCHS were subsidized housing schemes, they were for different target groups and were administered by different agencies with different financial arrangements. She reiterated that the buy-back arrangement provided for SCHS purchasers was designed to deter property speculation rather than providing them with a safety net in the event of changes in financial circumstances or falling property prices. Moreover, the provision of a full buy-back guarantee would likely have serious implications on the financial position and contingent liabilities of HS.

6. Mr LEUNG Yiu-chung and Ms CHAN Yuen-han did not accept the Administration's explanation. Mr LEUNG remarked that as SCHS buyers concerned would be responsible for paying the land premium and other administrative costs upon resale of flats to HS, no financial losses would be incurred on the part of HS. PAS for H explained that although sites were granted to HS at a concessionary premium at half market value for sandwich class housing developments, HS, as a self-financing organization, had to recover the cost of land premium from the pre-sale proceeds of SCHS flats in order to support other public housing projects under its purview. The financial status of HS would be unduly affected if it had to buy back all SCHS flats. Mr LEUNG however pointed out that HS was only requested to buy back flats from those purchasers who faced genuine financial difficulties as a result of unemployment or substantial salary cut.

7. On eligibility for other subsidized housing benefits, Dr YEUNG shared the concern of the Hong Kong Housing for the Sandwich Class (HKHSC) and urged the Administration to relax the property ownership restriction rule for defaulted SCHS buyers who faced genuine financial difficulties so that they could apply for other housing subsidies such as public rental housing (PRH) immediately after default. PAS for H explained that according to the advice obtained from the Department of Justice, a person who had signed an ASP acquired an "equitable interest" in the property concerned even though he did not complete the transaction. The property in question was treated under the law as belonging in equity to the purchaser despite the purchase money was not fully paid. Such an "equitable interest" had monetary value and was transferable in the open market. Based on these considerations, persons who had signed an ASP would be regarded as having owned properties even though they subsequently defaulted on the purchase. As regards the property ownership restriction rule, PAS for H advised that the rule aimed to ensure that limited housing resources were allocated to those who were most in need and those who had not acquired any properties within the restriction period. It applied to all applicants and therefore was inappropriate to relax it for defaulted SCHS purchasers. Notwithstanding, these defaulted SCHS buyers could still enjoy other subsidized housing benefits in future if they met all the eligibility criteria, including the property ownership restriction rule, applying to individual schemes. For instance, a defaulted SCHS purchaser might apply for PRH, HOS or Home Purchase Loan Scheme two years after default or ten years in the case of Home Starter Loan Scheme provided that he met all the other prevailing eligibility criteria for these schemes. For those who had completed the transactions, they would be considered as having enjoyed public housing benefits and would be excluded from the enjoyment of other public housing subsidies offered by the Government.

8. Mr Andrew CHENG did not agree that a defaulted SCHS buyer should be deprived of the opportunity for applying other Government housing subsidies within the specific restriction periods due to his "equitable interest" in a property which he had never owned. He asked if the Administration would consider exercising discretion to waive the "equitable interest" liability of those defaulted buyers who faced genuine financial difficulties. In reply, PAS for H stressed that the Administration had to be very cautious in exercising discretion as this might set an undesirable precedent to other subsidized housing schemes. Apart from legal, technical and administrative considerations, the Administration had to strike a balance between the need to assist defaulted SCHS and the interest of other applicants under various subsidized housing schemes who had never received any form of housing subsidies. Besides, it would be difficult to determine whether a defaulted SCHS buyer was experiencing genuine financial difficulties. Dr YEUNG remarked that the Administration could collect proofs like checking with his employer etc.

9. On sales prices of the remaining SHCS flats, Mr NG Leung-sing shared HKHSC's concern about the difference in the prices of comparable flats within the same SCHS project sold at different phases. He expressed worries that the difference would be even greater if the sales programme was further delayed. The Executive Director/HS (ED/HS (Ag)) explained that in determining the sales prices of the remaining SCHS flats, HS would take into account factors such as construction cost, market situation and affordability of eligible households.

10. In view of the poor construction quality of SHCS flats, Ms CHAN asked if HS would allow all SCHS buyers to inspect their own flats before completion of assignment as in the case of the Pinnacle. ED/HS (Ag) replied that unlike the Pinnacle which was a new project, the SCHS flats available for sale now were remaining flats from previous developments. As previous purchasers of these developments were not arranged to view their flats before completion of assignment, any different arrangement at this stage would be inappropriate. She added that HS would be selling completed flats for new SCHS projects such as the Belair Heights. Prospective buyers would be able to have a sight of the actual flats beforehand. As regards construction quality, ED/HS (Ag) assured members that HS would follow up and make good all defects reported by SCHS purchasers after completion of assignment. Mr NG emphasized that as the sole developer of SHCS projects, HS had the responsibility to ensure that the quality of SCHS flats was value for money.

11. On membership of the Executive Committee of HS, ED/HS (Ag) advised that according to the Constitution of HS, the Executive Committee Members were elected by the General Members of HS in the Annual General Meeting. To improve the work of HS, the Society would from time to time also invite people with different background, expertise and knowledge to join its Executive Committee.

Conclusion

12. Mr LAY of HKHSC considered it unfair that defaulted SCHS buyers could only apply for PRH or HOS two years after default while PRH tenants defaulted on the purchase of HOS flats could be immediately re-housed back to PRH. To follow up the various issues raised at the meeting, Mr LAY requested that the Administration should arrange another meeting with HKHSC. He added that HKHSC would put forward a nomination to HS for its consideration for appointment as Executive Committee Member of HS in due course. PAS for H explained that each subsidized housing scheme had its own target group warranting the application of different property restriction periods. The special re-housing arrangement for defaulted PRH tenants was to take into account the fact that they were mainly low income group with low affordability. To facilitate a better understanding, members requested and the Administration undertook to provide an information paper confirming the eligibility of defaulted SCHS purchasers for other subsidized housing benefits.

(Post-meeting note: The Administration reply was circulated vide LC Paper No. CB(1) 1921/98-99.)

V Bedspace apartments

Meeting with the Joint Concern Group on Problems Arising from Bedspace Apartments
(LC Paper No. CB(1) 1644/98-99(03))

13. Mr LI Ting-ho opined that the Bedspace Apartment Ordinance (the Ordinance) was not able to improve the existing living conditions in bedspace apartments (BSAs), particularly in respect of safety and overcrowdedness. Mr SHEK Kam-ming supplemented that some unscrupulous operators had partitioned their BSAs into small cubicles in order to obviate the need to comply with the statutory requirements set under the Ordinance. The Joint Concern Group therefore urged the Administration:

- to redefine the definition of BSA under the Ordinance to cover cubicle apartments for regulation;

- to step up enforcement to ensure that all BSAs complied with the statutory requirements under the Ordinance;

- to stipulate in the Ordinance the minimum living space for individual lodgers based on the prevailing space allocation standards of five-and-a-half to seven square metres per person for PRH;

- to review the admission criteria and house rules of singleton hostels operated by the Home Affairs Department (HAD) to attract more residents; and

- to increase the production of single-person PRH flats to re-house all lodgers of BSAs and cubicle apartments.

Research report on Housing Standards of Private Dwellings
(LC Paper No. RP 10/98-99)

14. At the invitation of the Chairman, the Head (Research and Library) (H/R&L) briefed members on the research report which aimed to provide references on the housing standards of private dwellings in places outside Hong Kong in order to assist members in considering measures to improve the living conditions of residents in private premises, in particular those living in bedspace and cubicle apartments.

Meeting with the Administration
(LC Paper Nos. CB(1) 692/98-99(07), 1197/98-99, 1621/98-99 and 1644/98-99(04))

15. Members noted from the research report that some overseas countries such as UK and Japan had either legislation or guidelines on standards of living space and living density. Ms CHAN Yuen-han asked if the Administration would consider adopting a similar approach with a view to improving the living conditions of BSA lodgers. The Principal Assistant Secretary for Home Affairs (5) (PASHA(5)) advised that although the Ordinance was aimed at regulating the building and fire safety of BSAs, the overcrowding problem of BSAs could also be relieved by the compliance of BSAs with the standards set under the Ordinance. By way of illustration, the prohibition of installation of triple bunk beds under the Ordinance could help reduce the number of lodgers in a BSA. PASHA(5) reiterated the Administration's stance that it was inappropriate for the Administration to propose legislation to regulate the minimum, nor the maximum living space for individuals in private premises. A person's living area should be determined by social economic factors such as the market conditions, economy, personal finance and preference. Moreover, such a regulation, even if it existed, would be difficult to enforce. He considered that the housing needs of lodgers in genuine need should be addressed through the public housing programme.

16. PAS for H stressed that the Government noted with concern that there was a number of families still living in shared or non-self-contained accommodation in squatter areas, temporary housing areas and BASs and it had aroused great public concern. The Government had committed in the White Paper on Long Term Housing Strategy in Hong Kong that it would provide PRH to families with genuine need. To ensure fair and equitable allocation of public housing resources, all inadequately housed families, including BSA lodgers, were required to register on the General Waiting List (WL) for PRH. In the allocation of PRH, elderly single lodgers aged over 60 would be given priority within two years of registration while other single persons had to wait for a longer period of time due to the limited supply of single-person PRH flats. PAS for H however assured members that efforts such as reviewing the flat mix in new PRH estates had been made to increase the supply of these flats. The Administration was also conducting a comprehensive review of the needs of non-elderly single persons for PRH flats, subsidized home ownership flats and housing loans, and would consider the kind of assistance which could best meet their housing needs. Members would be informed of the results of the review in due course.

Admin

17. In regulating the living density of dwellings, Mr Edward HO considered that it would be more effective if the Administration could use population density instead of plot ratio as the basis of planning for land sales. Mr HO Sai-chu however did not agree that the Administration should regulate the living space and living density of private premises. He considered that the Administration should review the existing regulatory regime in respect of design and safety of dwellings to ensure that it was comparable with the international standards, such as the housing fitness standard outlined in Appendix II of the research report. PAS for H confirmed that similar standards, albeit not identical, had been employed by the Administration in assessing the fitness of dwellings. She also pointed out that the allocation scheme for public housing in UK as set out in Appendix IV of the research report appeared to be more or less the same as that in Hong Kong.

18. Mr SZETO Wah asked if the Administration would include in the periodic report in respect of Hong Kong under Articles 2 to 16 of the International Covenant on Economic, Social and Cultural Rights the overcrowding conditions in both PRH and private dwellings as well as a comparison on the fitness of dwellings in Hong Kong with that required by the international standards. PAS for H advised that in its latest report to the United Nations' Committee on Economic, Social and Cultural Rights, the Administration had included many issues raised by Legislative Counsellors before as well as the measures taken to tackle the problems. Mr SZETO expressed concern that the report was only an overview of the situation in Hong Kong without elaboration on specific problem areas.

19. Mr Fred LI noted that BSA lodgers were reluctant to move into singleton hostels operated by HAD due to the stringent house rules on their opening and visiting hours. He asked if the Administration would relax the rules to attract more residents. PASHA (5) replied that although lodgers in singleton hostels were required to observe some basic rules, such rules were reasonable and necessary to maintain peace and harmony among the residents. The General Secretary/Agency for Volunteer Service (AVS) remarked that except for the one in Wanchai where warden service was provided, lodgers in other hostels managed by AVS were given keys of the main doors to allow unrestricted entry to the hostels at all times. However, in view of the small size of these hostels, visits by outsiders were not encouraged to avoid disturbances to the other residents. The Senior Administrator/the Salvation Army (SA/SA) supplemented that the house rules at Sunrise House were basically the same as those of the other hostels. Lodgers were given a smart card to enable unrestricted entry to the hostel. They could also receive visitors at the designated floor.

20. On the occupancy rate, SA/SA advised that there were at present 138 lodgers living in Sunrise House. The low occupancy rate was attributed to the need to reserve sufficient places to meet the demand arising from displaced BSA lodgers as a result of the implementation of the Ordinance. A new round of application was expected soon as BSA operators might choose to reduce the number of bedspaces or cease operations upon renewal of licences. The Chairman asked if the Administration would allow applications by other lodgers if there were no more displaced BSA lodgers. PASHA (5) replied that as the Administration had pledged that no one would be rendered homeless as a result of the implementation of the Ordinance, it had to ensure that sufficient places were available in Sunrise House to re-house the displaced lodgers. He considered that the current occupancy rate of singleton hostels might not be indicative of their popularity as HAD was in the process of offering accommodation to the displaced lodgers. The occupancy rate was expected to rise in the near future.

21. To improve the occupancy rate of singleton hostels, Mr TAM Yiu-chung opined that publicity on the positive aspects of these hostels should be stepped up with a view to attracting more residents. PASHA (5) took note of Mr TAM's view and advised that activities such as visits to the singleton hostels by BSA lodgers had been arranged to enhance their understanding of the improved living conditions of these hostels. He also agreed that the location of singleton hostels was a cause of concern of BSA lodgers, and that HAD's singleton hostels were already in densely populated urban districts with a high concentration of BSAs. In addition, a new hostel was planned to be built at High Street.

Conclusion

22. To facilitate future discussion of the subject, the Chairman requested the Administration to:

- check and report to the Panel the number of BSAs which had been converted to cubicle apartments with a view to obviating the need to comply with the requirements under the Ordinance;

- respond to the research report on "Housing Standards of Private Dwellings" and the paper on "Bedspace Apartment: Public views on the effectiveness of current regulating measures and related issues and Government's response" circulated vide LC Paper Nos. RP 10/98-99 and CB(1) 1621/98-99 respectively; and

- examine the impact in case further legislative measures to regulate living space and living density were to be introduced in Hong Kong.

Members also invited the Secretariat's Research and Library Division to conduct a research into the major housing standards in Hong Kong.

VI Any other business

23. There being no other business, the meeting ended at 6:55 pm.

Legislative Council Secretariat
3 November 1999