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to learn from and to emulate. This might demotivate them, perpetuate
dynamic poverty and affect their future likelihood of moving up the social
ladder.

This Report believes that extending homeownership is essential to
family investment in both human and social capital. Indeed, many studies
have shown families who are homeowners are more likely to invest in
childhood development and neighbourhood stability.

5. Public Housing Policy and Social
Justice

The current public housing policy is unjust because the society
loses the value inherent in the public sector housing unit, the physical
premises itself and the land that it occupies. The evaporation of resources
benefits no one.

First, the taxpayer hardly ever collects the unpaid land premium
because very few households ever pay it. Second, the subsidy provided by
taxpayers to the household is the difference between the market value of
the unit and the price the household pays for its use as shelter. Over time,
the amount of the subsidy will increase as land values increase. It is unjust
that the taxpayer pays for the asset value of the unit, but the household
receives only the shelter value of the unit.

6. The Subsidised Homeownership
Scheme (SHS)

A faster, less expensive and non-wasteful solution to address
these malign issues will be the implementation of the SHS, granting
eligible families the option to either purchase, rent or the choice to “rent
first, purchase later" new public housing units in the future. Also, under the
SHS, the unpaid land premium will be considered as a “loan”, with its value
fixed at the date of occupation, instead of effectively an “equity” under the
existing system that fluctuates according to changes in market value of
the unit.

This would render settlement of the unpaid land premium much
easier, and a market for these units will quickly emerge. There would be an
incentive for trading to take place and the re-matching of tenants’ needs
and housing units would come into effect and the problem of inequity
could be rectified.

Additionally, bona fide homeownership in public housing units
would incentivise families to stay together and discourage family
breakdown. This can therefore act as a barrier against the costs of a broken
family among the children of the divorcees and prevent the build-up of bad
neighbourhoods that fosters poverty and lowers social mobility.

Since social mobility is closely associated with homeownership,
the SHS would relieve Hong Kong of the bourgeoning problems of income

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