2024-05-14 28Hse Editor
A fresh wave of starter homes has arrived!
At the start of 2019, the Government launched ‘eResidence’ – the first pilot starter home project for Hong Kong residents – which provided 450 units at the time. Now, the government has announced news for the second phase of eResidence in Hung Hom. It is expected to be pre-sold in September.
Phase Two of eResidence (Tower Three) is located on Chun Tin Street/Sung Chi Street. It provides 260 units, half of which are two-bedroom and three-bedroom units, with saleable areas ranging from 430 to 600 square feet. The remaining units are one-bedroom apartments measuring 300 to 360 square feet in size. The project is expected to be completed on the 30th of November, 2026.
As in the past, the Phase Two development will also have discount rates and income restrictions with details to be announced. With reference to past practices, the discount for first-home buyers is 10% lower than that for Home Ownership Scheme (HOS) flats. Based on the 32% discount for HOS sales this year, the estimated discount is between 22% and 12% off the market price.
The purpose of the “Starter Homes" Pilot Scheme for Hong Kong Residents is to help those who are neither eligible for HOS nor cannot afford private housing units to purchase homes. Although the income requirements are being discussed with the Housing Bureau, referring to previous regulations and HOS 2023 details, the income restrictions are higher than the upper eligibility limit for HOS White Form applicants. However, it does not exceed the limit plus 30%, and there is an asset limit.
Based on these calculations, the monthly income limit for one-person applicants is roughly HK$31,000 and the upper limit is HK$40,300. Meanwhile, the monthly income limit for two or more family applicants is HK$62,000 and the upper limit is HK$80,600. Eligible applicants are required to be a permanent resident of Hong Kong who have never owned any residential property in Hong Kong, directly or indirectly, in any form.
In addition, according to eResidence regulations, it is estimated that the second phase will also have a five-year prohibition period, during which the unit cannot be sold or rented out. After the first five years, the owner must pay a premium to the Urban Renewal Authority (URA) before transferring or renting out the unit. However, the above discount rate, income and application qualifications are purely rough estimates based on past data, and have yet to be announced by the URA.
Project maintenance projects have aroused concern and controversy from time to time, and one of the biggest hurdles is the problem of funding. When carrying out large-scale maintenance projects, maintenance funds may be insufficient, and even if the project does not have a maintenance fund, the owners need to find ways to raise funds for the project to be developed. However, not all owners can spend large sums of money at one time, resulting in late maintenance.
It is worth noting that the URA will present eResidence’s second phase as a pilot project, and include a clause in the Deed of Mutual Covenant requiring owners to formulate a regular maintenance programme and make contributions to the maintenance fund. This will encourage owners to formulate a regular maintenance programme and a related financial reserve plan from the time they move into their buildings, so as to promote the new mode of "preventive maintenance" of buildings through the financial arrangement of making more out of less.
What can be done? At present, some buildings will set up a special fund or reserve, which usually takes a portion of the monthly management fee paid by owners for regular contributions and deposits it in a dedicated account to cope with large-scale maintenance projects in the future. This serves as a good practice that owners of eResidence Phase Two apartments can adopt.
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