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VI. The Subsidized Homeownership Scheme proposes that, in future, all new
public housing should be geared towards satisfying demand for homeown-
ership, and that Rent-to-buy arrangements should be used as a stopgap
measure before homeownership is affordable.

i.) Subsidized-sale units are sold to eligible households at a preferential price.
ii.) Rent-and-Buy units are available to new PRH tenants for renting before
they have the means to buy the units at affordable prices below market
value. Such units can always be bought at a preferential price throughout
the tenancy and the prices will not be subject to market adjustments. After
living in this kind of unit for a period of time, a tenant can choose to buy it.
Even if they choose not to buy the unit, they can still continue to rent it. In the
long run, more and more tenants of such units are likely to become home
owners.

VII. The Government will, through guaranteed mortgage, help low-income fami-
lies to buy units sold under the Scheme and enjoy 90% to 95% mortgage. This
will serve to satisfy their financing needs.

VIII. The greatest advantage of the Scheme over Home Ownership Scheme (HOS)
and the previous Tenants Purchase Scheme (TPS) lies in the fact that pre-
mium payment arrangement is easier with the proposed scheme. This will
provide a stronger incentive for owners to make premium payment, thus fa-
cilitating unit circulation and enhancing market efficiency. Four methods are
proposed in the following for public discussion:
i.) Zero premium payment: In other words, all subsidized by the government.

ii.) Discounted premium in year of occupation: Suppose the premium in year of
occupation is $2 million, with 20% discount rate, the discounted premium is
80% of $2 million, which is $1.6 million. Whenever premium payment is pur-
sued it will be proceeded according to this price and the amount will not vary
with market changes.
iii.) Either premium in year of occupation or market premium: If property prices rise,
the owner will only need to pay the premium in year of occupation. If prop-
erty prices enter a downward trend, the premium payment will be equal to
the market premium. This arrangement allows the premium to be capped
at the original level.
iv.) Either the average premium or market premium: If property prices rise, the
owner will pay the average premium over the years of occupation. If property
prices enter a downward trend, the premium payment will be equal to the
market premium.
IX. The Subsidized Homeownership Scheme has the following advantages:

i.) Enabling eligible members of the public to choose to rent or buy their units,
giving them the flexibility in exercising their rights to meet their housing
needs;
ii.) Rebuilding the housing ladder by offering preferential prices and incentives to
help home owners to move up the housing ladder one step at a time.
iii.) Enhancing market efficiency, unlocking the full value of public housing
units, and minimizing public housing resource mismatch;
iv.) Alleviating conflict between “those with property” and “those without
property”, harmonizing society, and unifying Hong Kong;
v.) Recovering part of public housing costs, easing financial pressure on the
Hong Kong Housing Authority (HA); and
vi.) Utilizing public resources more effectively and helping the general public to
gain wealth in preparation for the challenge of an ageing population.
X. The Scheme is aimed at facilitating utilization of public resources and making
good use of limited supplies. This will also enable members of the public to
be home owners, thus enhancing their quality of life and redressing social
problems.

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