Page 6 - LanHse_Part1_Subsidized_eng

2. Policy Background

2.1. Cost-ineffective public housing fails to satisfy
residents’ needs

Public housing is basically a non-market means of subsidizing housing.
The beneficiaries receive neither cash allowances nor housing coupons
to enable them to rent properties on the market. They can only choose to
accept or refuse a public housing unit assigned to them, but do not have
a choice of size, location, floor or layout of the unit.

Over the last six decades since their introduc-
tion, Hong Kong’s PRH units have served the
needs of more than two generations. Howev-
er, even when a household has the financial
means to rent a larger unit, unless its size ex-
ceeds the minimum average living space per
person designated by the Housing Authority
(HA), the tenants will not be allowed to move
to ideal-sized units even if they are willing to
pay higher rents.

The question is, given the growing prosperity of society and the dif-
ferent individual needs in various stages of life, a household’s housing
demand is also changing with the times. As people often change jobs,
receive promotions, get married and raise kids, or go to school or change
schools, it is also natural that different generations of the same family
would like to live close by and take care one another. The community
at large will have to pay a heavy price if PRH tenants are not allowed to
move to more ideal units according to individual needs and social change.
Since PRH tenants are not allowed to choose their units, the value of
the units in their own eyes will inevitably be lower than its potential value
or that perceived by others. To appease the households who can afford
to rent larger PRH units but are made to endure living in smaller ones, the
HA have no choice but to offer huge discounts on rents.
In fact those who tend to underestimate the value of their own units
are often the tenants themselves since the units they are forced to live
in are not to their liking. However, if the units are made available to the
market, depending on the size, location or floor, there may well be buyers
out there. A unit renting for $2,000 per month through the HA could fetch
$13,000 or even $20,000 on the market.

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