The Housing Authority (HA) today (30 March) endorsed a more targeted approach in conducting its rent review by waiving the rents of households receiving Comprehensive Social Security Assistance (CSSA), on top of an across the board 10% reduction for other households.

The decision was made after a thorough deliberation by Members on rent adjustment options which aim to bring the median rent-to-income ratio (MRIR) of public rental housing (PRH) down to the statutory cap of 10%.

Members noted that the adopted option has taken into full account the affordability of PRH tenants. As compared with a simple 38% rent reduction for all households, would inflict a relatively lesser degree of financial damage to both the HA and the public purse.

The 38% rent reduction for 547 700 PRH units covered by the current review would incur total revenue forgone of $3.44 billion in the first year of implementation, and $11.2 billion for three years.

The adopted option, which causes the least financial loss to public purse among the proposals examined, is estimated to cost the HA $2.52 billion for the first year and $7.76 billion for the coming three years.

As the Social Welfare Department will correspondingly adjust the amount of rent allowance payable to 117 300 CSSA households in PRH, the net loss under this approach for the public purse as a whole is expected to be in the region of $0.74 billion for the first year and $2.42 billion in the next three years.

"In considering the proposals, Members were of the view that it is important to strike a balance between the interest of PRH tenants and that of other sectors of the community," the spokesman said.

The 10% reduction for non-CSSA households is also considered to be a more viable and acceptable alternative as this level of rent reduction is broadly in line with the general deflation rate since the rent review in 1999, he noted.

Members agreed that the targeted option helps address directly the problem of a rising MRIR largely due to an increase in CSSA households. The spokesman, however, stressed that the interest of individual CSSA households would not be adversely affected nor would they receive any additional benefits.

The HA is obliged under the Court Order to conduct the current rent review and that the implementation of the option chosen is subject to the outcome of the HA's appeal against the High Court ruling on the Judicial Review cases.

"If the outcome should be in favour of the applicants, we will duly and promptly implement the rent reduction retrospectively together with interest payable," the spokesman added.

"The HA still holds out the prospect of a successful appeal," he said, adding that the current rent review exercise has clearly underscored the irrationality and inadequacies of the existing statutory MRIR cap of 10%.

"A new mechanism is needed if a fairer and more sustainable rent adjustment process is to emerge. Through the work of the Ad Hoc Committee on Review of Domestic Rent Policy, we should be able to recommend, among others, a more rational rent adjustment mechanism that provides a closer link with tenants' affordability, and contributes to the long-term sustainability of the HA's public housing programmes," the spokesman said.


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