Hybrid housing an affordable alternative

HONG KONG: Hongkongers priced out of the property market could soon get a more affordable alternative — a scheme that allows them to part-buy and part-rent their dream home.

According to an ongoing study by the Bauhinia Foundation Research Centre, this hybrid model might be the answer to the thorny issue of providing affordable housing to people who are not eligible to apply for public rental flats.

Centre chairman Anthony Wu Ting-yuk said the concept was modelled on Britain's shared ownership schemes under which a homebuyer can part-buy and part-rent their home.

"Shared-ownership schemes can provide the Hong Kong government food for thought in helping local people buy their homes," Wu said.

The centre's study on home ownership is expected to be completed by October. Chief Executive Donald Tsang Yam-kuen will give an account of the results of the consultation on subsidising home ownership in his policy address in October.

Under the shared-ownership schemes in Britain, a homebuyer can buy as little as a 25% share in his flat and a housing association buys the rest. The buyer pays rent set at an affordable rate, in most cases 3%, on the part that he doesn't buy. He also has the right to buy the housing association's share in the property.

The bigger the share that the homebuyer purchases, the less rent he has to pay.

The idea is that the initial outlay to buy a property is far smaller than is usually the case and, as a result, people who would not be able to own their own home are able to do so. The initial outlay to buy a property is far smaller than usual, opening up the market to people who would not otherwise be able to own their own home.

"Our idea is that, for a HK$2 million (RM829,989.71) property, a homebuyer in Hong Kong only has to pay HK$1 million and pays rent on the other half owned by the government," Wu said.

"The homebuyer can buy the share owned by the government within 10 years at the original price. The arrangement would protect the homebuyer from dramatic surges in property prices."

Wu said he appreciated possible concerns about details of the plan such as the rate of rent a homebuyer had to pay for the government's share and arrangements for homebuyers to sell their share.

"But let's start the discussion about whether shared ownership is a good idea in the first place," he said.

Francis Lam, a Hong Kong-born architectural assistant, was one of the beneficiaries of Britain's shared-ownership scheme when he bought a £297,000 (RM1.47 million) flat in London in September .

He bought a 35% share in his flat and had to pay a rent of £380 per month.

"There is no doubt that the scheme does cut down the initial cost but I also think there is uncertainty, particularly how many people would take the full ownership of their property. If the figure is low, the scheme will gradually become another public housing thing, " Lam said.

"Nonetheless, I believe this scheme eases off a lot of political and social tension regarding house prices within our country."

Wu said another proposal to be included in the centre's study was provision of rent subsidies for people who were eligible for Home Ownership Scheme (HOS) flats.

"The people with the biggest grievances were those who could not afford to buy property and face difficulty paying rising rents," Wu said.

"There would be no need for people to rush to buy property when prices are rising if they are provided with a certain amount of rent subsidy," he said.

In May, Tsang announced a public consultation on whether the government should subsidise people to become homeowners, and if so, who should be subsidised and what kind of method should be adopted.

Tsang will give an account in his policy address in October if the government has further ideas on the issue after the consultation.

As property prices rise, there have been repeated calls for the chief executive to resume the HOS. Tsang said the government was aware that some people who did not qualify for public rental flats could not afford to buy private flats.

Meanwhile, the research centre is carrying out another study on the salary and social mobility of the so-called post-80s generation compared with older age groups.

Wu said the study would compare the pay rises and promotion prospects of university students graduating in 2000 with those who graduated in 1980 and 1990.

Since the protests against funding for the express rail linking Hong Kong with Guangzhou, there has been a popular notion that young people are becoming increasingly discontent and radical.

Some local media attributed the radical actions of some young activists to the lack of social mobility in Hong Kong and the sense of powerlessness among twenty-somethings in the city.

"My own observation is that the gap in status mobility between students graduating from university in 2000 and their counterparts graduating in 1980 and 1990 is bigger than that in salary mobility," Wu said. — South China Morning Post