Hong Kong Special Administrative Region government officials said the proposed new policy to regulate subdivided units will not lead to a substantial rise in rents, and gave their assurances that the city has sufficient public housing for residents who need to move out of substandard units.
In Chief Executive John Lee Ka-chiu’s third Policy Address, the government proposed drafting a law to ensure the city’s subdivided units — which often have the worst living conditions in the city — can meet the minimum standards.
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Introducing policy details at a local radio program on Thursday, Lee said the legislation is expected to be completed in 2025, and recommended a minimum term of two years of imprisonment for owners who continue to rent out substandard units after the law’s enactment, to ensure deterrence.
Under the new policy, about one-third of the city’s subdivided units will need to be renovated as “Basic Housing Units”, with a grace period to meet the new standards, while more than 30,000 households living in these substandard flats will have to be relocated. This has raised concerns about how such a large resettlement will be managed and whether the new requirements will lead to rent hikes.
During a question-and-answer session with lawmakers on Thursday, Lee restated the government’s commitment to preventing homelessness and offering support to those requiring assistance.
He said that 50 to 60 percent of residents in subdivided units are eligible, or will become eligible upon obtaining permanent residency, to transition to public rental flats.
Basic Housing Units, which are subdivided flats meeting the government’s standards, are only intended to provide a temporary solution. Lee said that the primary objective is to enhance the availability of public housing.
At a policy briefing on Thursday, Deputy Financial Secretary Michael Wong Wai-lun said that compared to a one-time expenditure on renovation, the rental prices of subdivided units are primarily influenced by the supply-and-demand dynamics of the market.
He said he anticipates a decline in the demand for subdivided units in the market as 60 percent of compliant households could be eligible for public housing. The market’s supply is expected to stay stable, he said, as 70 percent of the units require no renovation, and the remaining 30 percent will reenter the market after renovation.
Secretary for Housing Winnie Ho Wing-yin said she believes that the upcoming significant surge in public housing supply in Hong Kong has empowered the government in its determination to eradicate substandard subdivided units.
According to the 2024 Policy Address, coupled with Light Public Housing — which follows a standardized simple design and a special construction approach and can thus expeditiously fill the short-term gap in public housing supply — the city’s total public housing supply in the coming five years will reach 189,000 units, which is about 80 percent higher compared with when the current government took office.
However, Ho also said that to prevent panic, law enforcement actions to crack down on substandard flats should not be taken hastily, and the eradication process should proceed methodically.
Tenants affected by the measures, if unable to access public housing, can apply for the city’s transitional housing or Light Public Housing.
For landlords, after the grace period for upgrading, the government will consider multiple factors during enforcement, including the building’s condition, where the subdivided units are situated, and the need for relocation assistance.
Another highlight of this year’s Policy Address is the reduction of the duty on premium spirits, aimed at boosting trade.
Under a two-tier system, the duty on liquor with an alcoholic strength above 30 percent and with an import price of over HK$200 ($25.73) will be reduced from 100 percent to 10 percent for the amount above HK$200.
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The duty rate for quantities costing HK$200 or less, as well as for liquor with an import price of HK$200 or below, will remain at 100 percent.
During another policy briefing, Secretary for Health Lo Chung-mau explained that the decision on duty was made after carefully balancing the needs of economic trade with public health.
He said that the two-tier tax system would not only stimulate the economy and trade but also minimize the impact on liquor consumption. He said that with the introduction of the zero tax on wine in Hong Kong in 2008, per capita alcohol consumption had only slightly increased before decreasing again.
He also said that no policy is intended to encourage excessive drinking among residents, adding that the authorities have always been vigilant about alcohol abuse or dependency.
Also on Thursday, the government announced the formation of its Task Group on New Medical School to outline the vision and guidelines for establishing a new medical school in the city, which is also a significant policy initiative that was covered in Wednesday’s Policy Address.
