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Thursday, May 19, 2022

Public housing provider expects HK$2.1bln deficit in 2025

Public housing provider expects HK$2.1bln deficit in 2025

The Housing Authority is expecting a HK$2.1 billion deficit in the 2025 fiscal year for its public rental housing estate operations, due to an increase in their supply.
However, the authority will still have an overall surplus, which is forecast to be nearly HK$10 billion in this current fiscal year.

After a meeting on Thursday, its finance committee chairman Chan Ka-lok said the current-year deficit is believed to be from last September’s rent waiver policy.

Without the waiver, the HA is expecting a HK$193 million surplus in the next fiscal year, Chan said.

“However, given the number of public rental housing flats will increase in the coming years, if the rent remains unchanged, and the construction cost and operating expense continues to increase, the deficit will reach over HK$2.1 billion in 2025,” he added.

The finance committee also projected that the authority will have the necessary financial resources to meet its expenditure and take forward its current public housing construction program and maintenance in the next five years, according to Chan.

Despite a HK$400 million deficit in its public housing account for the current fiscal year, he expects the authority to have a HK$960 million overall surplus this year, thanks to the income from rent in commercial buildings and the sales of subsidized public housing units. This revenue will offset the deficit of operating public rental estates.

But Chan said the finance committee’s forecasts have yet to take into account all the financial implications that may arise from the updated 2021 policy address projection that there be 330,000 more public housing units by 2032.

The current forecasts up to the 2025 fiscal year only reflect the financial commitments of the planned production of around 100,000 flats, he added.

“We envisage that the HA’s construction expenditure for the second five-year period – starting from the 2027 fiscal year to 2031 fiscal year – will more than double than that estimated in the current forecasts.

“The authority will continue to remain vigilant in exercising prudent financial control, and re-prioritizing tasks where appropriate to achieve the public housing supply target,” he added.

Housing Authority committee members will examine the budget on January 17, which will be submitted to the Chief Executive for approval afterwards.

Meanwhile, the authority’s subsidized housing committee decided to tighten alienation restrictions of the Home Ownership Scheme in a meeting on Thursday.

Owners will be allowed to sell their flats at no more than the original price in the secondary market in the first five years, instead of two years in the past, and they will also only be allowed to sell their flats in the open market after 15 years instead of 10.

“The general public view is that [subsidized housing flats] owners should not be allowed to trade their flats in the secondary market at a freely negotiated price so soon after their initial purchase,” a spokesman for the authority said.

The other reason for the move is that more affordable and attractive subsidized housing flats will be offered for sale in future, he added.

The spokesman also said that the revised alienation restrictions would strike a balance between the need for sufficient safeguards against short-term speculation and the need to facilitate circulation of subsidized housing flats in the market.
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