2024-04-25 28Hse Editor
Amid extended waiting times for public housing—the fourth quarter of last year hitting an average of 5.8 years, a 0.2-year increase from the previous quarter—the importance of public housing in Hong Kong has never been clearer. While the government intensifies efforts to combat the misuse of public housing, some individuals are taking advantage of the system by illegally engaging in 'subletting upon subletting' practices.
A TVB report exposed an instance of a public housing unit in Tsing Yi being advertised online. The unit, with a saleable area of 220 square feet, includes one bedroom with a separate kitchen and toilet, and comes furnished with a sofa and wardrobe. The monthly rent is listed at HK$7,500, which starkly contrasts with the official rent of around HK$1,000. This means the tenant is pocketing an extra HK$6,000 every month.
This type of illegal subletting—without paying the premium for Home Ownership Scheme flats or Tenants Purchase Scheme units—is commonly referred to as the 'shadow market.' Engaging in such practices can lead to immediate termination of the lease without warning. Those involved are barred from applying for public housing for five years following the termination of their contract.
It's important to note that not only public housing tenants or owners are breaking the law; citizens who knowingly rent these units are also in violation of the Housing Ordinance and can face fines up to HK$500,000 and one year in prison.
Back in 2017, a family of four in Fanling's Cheung Wah Estate was charged and convicted of public housing fraud by the Independent Commission Against Corruption (ICAC). The mother rented out an unsubsidized public housing unit for five years and encouraged the tenant to lie, collecting HK$260,000 in rent and eventually receiving an eight-week prison sentence.
To avoid detection of 'subletting upon subletting,' both parties typically avoid signing a formal lease or stamping the contract, and the tenant is not granted the right to use the mailbox. In the case of the aforementioned Tsing Yi unit, renters were even asked to deposit the rent into a mailbox to minimize risk.
Tenants have been found instructing prospective renters on how to evade investigations by the Housing Authority, claiming that even if officials visit for a home inspection, they can be ignored, as the department will send someone to verify identities and complete the inspection.
But is all renting of public and subsidized housing illegal? Not at all. According to current regulations, owners of public and subsidized housing who have paid the land premium are legally allowed to rent out their units. For those not willing to pay the premium, there's still an option available.
Owners can apply for the “Letting Scheme for Subsidised Sale Developments with Premium Unpaid” under the Housing Society, which allows them to rent out the entire unit or individual rooms to eligible individuals on the public housing waiting list. This helps to increase the transitional housing supply. Both owners and tenants must meet specific criteria, and approval can take about a month. Upon successful vetting, they are issued owner or tenant certificates.
Undeniably, for those seeking rental options, distinguishing whether a property has paid the land premium can be challenging. Before renting, one can ascertain this by checking the land registry. Units that have paid the land premium will have a certificate lifting the transfer restrictions, confirming that the unit can be freely sold or rented in the market.
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