2024-04-30 28Hse Editor
Every phase of Hong Kong’s Home Ownership Scheme (HOS) has been well received by the public, with oversubscriptions every time. Despite a comparatively lukewarm response to the HOS 2023 homes, with a total of 163,000 applications received, the scheme’s 9,200 were still oversubscribed by 16.7 times.
The original purpose of the HOS is to provide an alternative home ownership option for low-income citizens who are ineligible for public housing. But in recent years, HOS flats have seen its share of speculation cases, with prices of second-hand HOS flats reaching record highs, contradicting the original purpose of the subsidised housing policy.
In recent years, some home owners have put their unmodified HOS flats (commonly known as "clear water flats") up for sale, which has stirred rumours of speculation. The flat in question is an upper-floor, four-bedroom flat in Hoi Lok Court’s Block E at Nam Cheong Station, with a saleable area of 629 square feet. An ‘unmodified’ flat, the flat can be used as a three-bedroom flat with ensuite facilities, and it was sold at a green form price of HK$8.38 million.
The original owner reportedly purchased the unit in October of 2019 for HK$4.4 million and held it for nearly four years. He left the market with a profit of HK$3.95 million, with the unit appreciated by 89%. The unmodified flat’s transaction details immediately aroused suspicion, due to concerns that the owner had never actually occupied the apartment and purchased it for speculative purposes.
Addressing the situation, the relevant agent responded that the unit had been lived in, but had not been renovated or demolished, hence its status as an ‘unmodified’ home. The Housing Department immediately launched an investigation, including contacting the unit’s original home owner for a meeting, inspecting the unit and requesting the owner to provide the required documents to understand the unit’s living conditions.
The Housing Department said it would take appropriate legal action if necessary. The sale of ‘unmodified’ HOS flats would constitute a breach of law, because the Agreement for Sale and Purchase (ASP) for subsidised flats – signed between the purchaser and the Housing Authority – stipulates that the property must be occupied by the purchaser and their family members listed in the application form.
If the purchaser ceases to actually or permanently reside in the property without the prior written consent of the Housing Authority, regardless of the reasons, the Housing Authority has the right to require the purchaser to sell the property back to the Housing Authority, and the relevant costs and expenses shall be borne by the purchaser.
To curb property speculation in HOS flats, the Housing Authority further tightened its transfer restrictions last year. The period for owners not to resell flats in the second-hand market at a price higher than the original price was extended from two years up to five years. From the sixth year onwards, the unit can be sold to qualified persons with green forms or white status without land premium. Meanwhile, the period for selling units in the open market after paying premium was extended from 10 years to 15 years.
These measures are designed prevent owners from profiting from the sale of flats through short-term speculation. So how can the government prevent applicants from selling flats without ever living in them? Indelibly, it is difficult for the government to determine which units are vacant. Some people suggest that before the HOS transaction, the Housing Department should send specialists to perform unit inspection, or review the unit’s electricity and water bills to determine whether the flat was occupied.
The above suggestions may involve privacy issues. Thus, the Housing Department should look into ways to plug any loopholes so that subsidised housing can help those in genuine need.
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