Rent-to-buy scheme may be expanded

HONG KONG: The controversial rent-to-buy scheme — supposedly a short-term relief measure for better-off home hunters — could be expanded if the response is good, Donald Tsang Yam-kuen has hinted.

The chief executive, who unveiled the scheme in his policy address last Wednesday, Oct 13, also challenged his critics and advocates of the now-defunct home ownership scheme (HOS) to ask perspective buyers which programme they would prefer.

Calls for reviving HOS mounted amid soaring flat prices in recent years. HOS, a Housing Authority programme aimed to help middle-class families own homes, was axed in 2002 in a bid to shore up the private property market.

Arguing against HOS, Tsang said yesterday at the Legislative Council that the authority should focus on offering public rental units to the needy, instead of building flats to sell.

"Our [rent-to-buy] scheme is an improved version of HOS," said Tsang, who took questions from 18 lawmakers during last Thursday's 100-minute session. Four of the legislators questioned the effectiveness of the rent-to-buy scheme or wanted HOS back.

But Tsang countered that the new scheme was better than HOS and the best option should be adopted to help people.

He called on his critics not to hold conspiracy theories. "We can also ask the end users which scheme they think is better," he said. "Depending on the market, we may consider increasing the supply [of rent-to-buy scheme flats]. But the market can change. When land supply increases, the market may be more stable. Whether the scheme is still needed, the government will discuss it then."

Under the scheme, formally called the My Home Purchase Plan, the government will let middle-income families rent Housing Society flats for as long as five years at a fixed amount. During the period, the tenants can choose to use half of the total rent paid toward a down payment to buy a home.

The first project under the scheme will provide about 1,000 units on Tsing Yi, and is expected to be completed in 2014. Four other sites in Diamond Hill, Sha Tin, Tai Po and Tuen Mun have also been identified for the construction of 4,000 flats.

In an interview on Commercial Radio last night, Secretary for Transport and Housing Eva Cheng said the rent-to-buy scheme had an edge over HOS because it allowed people greater flexibility in deciding when to buy. "It can address the biggest concern of homebuyers of being unable to afford a down payment," she said.

Earlier last Thursday, during a joint phone-in programme by three local radio stations, Tsang conceded the surge in property prices was partly due to the influx of capital from outside Hong Kong and the insufficient supply of land in recent years.

"The government should perhaps be partly responsible for not having made enough efforts after the property bubble burst [in the late 1990s] in securing sufficient land supply," he said.

Responding to a caller's suggestion of de-linking the currency to cool the market by discouraging the influx of hot money, Tsang said the US dollar peg was vital for maintaining stability in Hong Kong's currency and financial system.

Meanwhile, results of an instant poll released last Thursday by the University of Hong Kong showed 41% of the 1,020 people interviewed were satisfied with Tsang's policy address, up 11 percentage points from that of a similar poll last year.

On a scale of zero to 100 — with 100 being the highest score, the address on average scored 58.9 marks, up 5.4 points from last year, according to the survey by the university's public opinion programme. — South China Morning Post