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Hong Kong property tycoon in surprise call for return of HOS

HONG KONG: Hong Kong property tycoon Henry Cheng Kar-shun has called for the relaunch of a government-subsidised flat sale scheme that he and fellow private developers had once pressed hard to have abolished.

Cheng, a member of China's top political advisory body, now says the resumption of the home ownership scheme (HOS) could help ease public discontent in Hong Kong amid a heated property market.

The subsidised housing scheme, under which lower-priced flats are built for sale to the less well-off, was scrapped in 2002 by the government amid pressure from private developers, who criticised the scheme as an intervention in the free market.

Cheng's remark yesterday (March 7) also contrasted sharply with the position of the Hong Kong government.

Just last month, Financial Secretary John Tsang Chun-wah said the government "would not lightly return to the market", when asked if he would consider relaunching HOS.

Cheng, managing director of New World Development, said: "From the perspective of a developer, certainly I would not agree [with relaunching HOS]."

"But from the perspective of the whole society, I think the government should resume building HOS flats. These flats take care of the needs of middle-income families who may not afford to own their own homes.

"While low-income families can rent public housing, middle-income families should also be taken care of. This group of people now have big discontent with the society."

Cheng, a member of the Chinese People's Political Consultative Conference Standing Committee, said: "Why are there so many protests? Why are so many people unhappy with the government? It is because many people cannot enjoy a good living environment and they find many hardships in making a living."

Cheng was speaking on the sidelines of the plenary session of the consultative conference in Beijing.

Cheng appreciated the possible adverse impact of his proposal on the property market in Hong Kong but said this could be minimised by imposing tighter regulations on the resale of HOS units.

At present, HOS flat owners are subject to a set of restrictions when they want to resell their units.

In general, they can resell the units to public estate tenants after the first three years, with no need to pay premium to the government.

Cheng also dismissed as "just a show" a government proposal to cool the property market by means of a moderate increase of stamp duty on transactions of luxury properties, hinting it would have no effect.

Meanwhile in Hong Kong, some speakers at the RTHK City Forum on March 7  remained cautious about relaunching HOS.

Wong Leung-sing, an associate director of research at Centaline Property Agency, said: "The heated market is partly due to the low bank rate ... People look for investment opportunities but do not want to try again in the financial markets... many investors turn to buying flats. Building more HOS flats may not be addressing the right question." – South China Morning Post
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