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Thursday, Jun 01, 2023

Hong Kong housing boost must not come at subdivided flat tenants’ expense

Hong Kong housing boost must not come at subdivided flat tenants’ expense

The government’s proposal to lower the threshold that would trigger the compulsory sale of old buildings would affect many subdivided flat residents. A progressive approach would allow time to find a balance between the need for redevelopment, the property interests of minority owners, and the concerns of tenants.
Hong Kong has entered a period of change as policymakers work quickly to adopt initiatives to speed up construction of flats for those on the public housing waiting list and amend policies to streamline town planning and land supply processes.

Among these are moves to broaden private-sector participation in the redevelopment of old buildings. One key amendment would lower the threshold for compulsory sale of private buildings over 50 years old. These kinds of buildings also happen to be where over 80 per cent of subdivided flats are located.

While subdivided flats are not a long-term viable solution, they currently serve as a lifeline to residents who otherwise would not be able to afford housing in urban districts where they work, have family or send children to school. Many have also been on the public housing waiting list for over five years. Left unchecked, being evicted from their current homes may lead to great difficulty re-establishing their lives in distant corners of Hong Kong.

Under the current provisions for compulsory sale of a building, parties with an 80 per cent share in a building can force the remaining owners to sell their units for redevelopment. The changes being considered would lower this threshold to 70 per cent for buildings over 50 years old, and to 60 per cent for buildings over 70 years old.

There is no doubt that bringing old and dilapidated buildings up to modern standards can benefit the community. At the end of 2019, there were 35,700 private residential buildings in Hong Kong, including 6,996 over the age of 50 and 5,255 dilapidated “three nil” buildings, that is, those that lack an owners’ corporation, any form of residents’ organisation, or property management company.

But glossy, newly redeveloped properties don’t serve the vulnerable residents of older buildings. In fact, redeveloped properties can draw attention away from the core problem of housing inequities when better-off people take up the redeveloped properties, which are often bought at higher prices, while the previous more vulnerable residents cannot afford to stay.

Under further reduced thresholds, compulsory building sales could lead to the clearing of vulnerable residents from older buildings, potentially in messy, informal ways as owners and tenants move out quickly to fulfil the developer’s acquisition contract. Tenants of subdivided flats, especially, could be at risk of harassment, random eviction and homelessness.

To support tenants, practices of the Urban Renewal Authority (URA) should be considered. Tenants living in properties acquired by the URA may benefit from rehousing and receive a relocation allowance. However, private redevelopers are under no such legal obligation to compensate tenants.

Lowering the compulsory sale threshold is a benefit to developers that must be balanced by mandates to extend compensation to tenants while also safeguarding their housing rights.

Rather than relaxing the threshold from 80 to 70 per cent for buildings over 50 years old, the threshold should be lowered from 80 per cent to no less than 75 per cent, with the opportunity to reassess after a year. Likewise, for buildings over 70 years old, the threshold could be changed from 80 per cent to 65 per cent rather than 60 per cent. Smaller but progressive changes would allow time to assess building sales and address the potential impact on all residents.

In 2006, before the Land (Compulsory Sale for Redevelopment) Ordinance was first amended, the then housing, planning, and lands bureau collected community views on the proposals through public forums and group discussions with property owners and via the internet and post over a period of three months.

Recently, the government invited consultation on its proposed changes to the ordinance. But, breaking with past precedent, a public consultation period on the proposed changes has not yet been announced, and community forums and meetings have not been organised.

Fast-tracking or minimising the public policy consultation process could mean that affected residents and the wider community have little or no say about changes that have an impact on their lives. Limiting opportunities for residents’ input in the name of increasing efficiency should be considered with caution.

Another proposed change to the redevelopment ordinance suggests streamlining the litigation process for compulsory sale. But this measure risks going too far in narrowing the grounds on which owners can voice their concerns and report evidence supporting their claims.

Finally, the regulatory situation requires clarity. In January last year, a new ordinance on tenancy control for subdivided housing came into effect, offering some protection to tenants of such flats, including improved security of tenure.

Critical questions have yet to be addressed in the compulsory sale law, such as how subdivided unit landlords’ adherence to their contractual obligations will be monitored, and how the rights of residents of subdivided flats who still do not have a written tenancy agreement will be protected.

A softer, progressive approach would allow time to assess the impact of adjustments to the compulsory sale law and find a fair and nuanced balance between the need for redevelopment, the property interests of minority owners, and the concerns of potentially displaced tenants.

While competing policy interests must always be balanced, a relaxed compulsory sale law must contain measures to mitigate negative consequences to owners and tenants and provide mandates to serve the broader public good. This is best addressed by direct input from members of the public, and an open discourse on the needs of the community.
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