The government has announced that non-public housing tenants or tenants currently living in private residential flats will be allowed to buy Home Ownership Scheme (HOS) secondary flats in two phases, with a restriction that the the flats cannot be resold in the first two years without paying the land premium.

The Subsidized Housing Committee (SHC) of the Housing Authority's (HA) announcement follows an earlier Housing Department proposal to the HA that around 5,000 non-public housing tenants or tenants currently living in private residential flats, who are currently White Form Certificate (WFC) holders, will be allowed to buy the second-hand HOS residential flats without paying a land premium, in a move to revive the HOS secondary market transactions.

The SHC announced that the 5,000 flat sales quota will be launched in two phases. The first-phase application will be accepted starting from January. The first 2,500 allocated flats quota results will be announced in May 2013 and the remaining quota results will be announced in January 2014.

These flats will be subject to a restriction that the flat buyers cannot resell the flats within the first two years, unless they first pay the land premium.

The WFC holders' income level is capped at the HK$23,000 per month household level.

The Green Form Certificate (GFC) holders are public housing tenants who have no cap limit on their household income or asset level. Under the current system, the GFC holders have a much easier opportunity to be included in a quota to purchase HOS flats.

"The current restrictions regarding the HOS sales are effective so we continue to adopt these restrictions in order to avoid further market confusion," said Stephen Wong, chairman of the SHC, after its Wednesday meeting.

Some SHC member cautioned that the quota granted to WFC holders is too small and that it may lead to speculative activities in the secondary HOS market.

"The current 5,000 quota is too small to boost market supply so the HA should increase the quota to 10,000 in the coming three years. This can send a market signal to eligible WFC holders that they do not need to rush to purchase HOS flats whose prices (maybe rising)," SHC member Wong Sing Chi said after the meeting.

Recently there has been a flurry of home price hikes in the secondary HOS market as private residential flat prices surged driving buyers to turn to the HOS secondary market to buy their homes.

Chief Executive Leung Chun-ying last month vowed to tackle the local skyrocketing home prices by announcing a spate of measures, including the sales of the HA's remaining 830 HOS residential flats. The government also decided to sell the first batch of approximately 1,000 flats under the "My Home Purchase Plan". These flats were originally targeted for rental for up to five years.

oswald@chinadailyhk.com

(HK Edition 09/13/2012 page2)