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1. Authority divided on HOS flat proposals

1. Authority divided on HOS flat proposals
NG KANG-CHUNG, SCMP 30 November 2005

Middle-income home seekers could lose out under proposals by the Housing Authority to dispose of the remaining 16,000 unsold home ownership scheme (HOS) units after the government sale ban expires in 2007.

Proposals under consideration include dropping the preferential arrangement of selling flats at a 30 per cent discount on their market value and removing the option to buy back a unit in case the owner cannot afford the monthly mortgage payment.

The authority is also considering restricting sales to existing tenants of public housing estates.

Members of the authority are expected to meet on December 6 to discuss the proposals.

The 16,000 HOS flats have been left vacant since 2002 when the government imposed the sales ban in an attempt to shore up the private property market.

The authority plans to put on sale about 2,000 to 4,000 units a year from 2007, until all the remaining flats are sold.

Authority member Shih Wing-ching, also the chairman of the property consultancy Centaline (Holdings), said offering preferential terms to buyers was wrong.

"The government is not a charity and has no obligation to help people buy flats," Mr Shih said.

"If someone cannot afford to buy a flat, he or she can rent one."

However, another authority member, who preferred not to be named, was concerned that without the preferential terms, prospective buyers could be scared off.

"It is important we should get rid of the 16,000 units as quickly as possible. Keeping them is a liability to the authority."

The Democratic Party has estimated the ban would cost the authority $11.4 billion, taking into account losses in land premiums, management fees and depreciation.

A Chinese developer - the state-controlled China National Real Estate Development - had wanted to buy the unsold units and convert them into guesthouses.

However, the plan fell through after it was opposed by local politicians and industry players.

Property surveyor Tony Chan, executive director of Vigers Appraisal and Consulting, said the government should demolish all the unsold HOS flats and put the land on sale.

"From a purely economic point of view, it is the most efficient way. But certainly, environmentalists may raise concerns," Mr Chan said. He was referring to the Hunghom Peninsula saga in which the joint developers had wanted to demolish the 2,400 new flats and build luxury apartments.

The joint developers eventually scrapped the plan because of pressure from environmental groups.

According to its 2005-06 policy agenda, the Housing, Planning and Lands Bureau said the government will minimise the impact of the resale of the HOS flats on the private housing market and safeguard the authority's interests.