Lift 2-year resale ban on Home Ownership Scheme flats
Updated: 2013-02-20 16:42
By Ho Lok-sang in Hong Kong (China Daily)
The proposal to allow White Form applicants to buy existing Home Ownership Scheme (HOS) homes in the secondary market without paying the land premium appears justified on the grounds of "fairness". Certainly White Form applicants are no less deserving than Green From applicants for the chance to buy an HOS flat in the secondary market, if deservedness is entirely based on a means test. Many Green Form applicants are likely better off than White Form applicants, and they might even be better positioned to buy in the private market.
However, fairness is only one of the criteria to consider if a policy is worth pursuing. Policies must be evaluated in terms of whether they can achieve the policy goals intended, and the "price paid" in achieving those goals. Here the price paid refers to the social cost.
I assume that the most urgent goals for the Leung administration in housing would be helping as many people as possible to solve their housing problems. "Solving housing problems," for many people, simply means being assigned a public housing unit. For some, it means being able to buy a flat so that they need not worry about relocating every time rents rise beyond what they can afford.
Each time a Green Form applicant buys a HOS flat, a public housing unit is vacated, so another household waiting in the queue can be assigned a flat, and all the households waiting in the queue may enjoy the benefit of a shorter waiting period. For this reason, during a time when the queue for public housing is already excessively long, I do not agree to the policy of allowing White Form applicants to buy existing HOS homes in the secondary market.
Given that the government has already announced that White Form applicants will have a 5,000 flat quota for the HOS Secondary Market, I would advise against any resale ban for those who purchase on White Forms, as long as the resale is made to a Green Form applicant or another White Form applicant.
To alleviate the worry that some White Form applicants may take advantage of a "price arbitrage" opportunity, buying a HOS unit and then selling it in the open market for profit, the SAR government proposed to ban resale within two years.
Unfortunately, the proposed measures are likely to produce undesirable side effects and may not do much to alleviate the problem.
First of all, each time a Green Form applicant buys a HOS unit, whether first-hand from the Housing Authority or from existing owners in the secondary market, a public housing flat becomes available and helps shorten waiting time for every household in the queue for public housing. Why should we worry if a household resells its unit and makes a profit? After all, they are supposed to have met the criteria for purchasing a HOS unit.
The only justification seems to be the consideration that by banning resale within two years, those who want to "buy and profit" might opt out, leaving only those who really want to "buy and occupy." But will the two year ban really stamp out the "buy and profit" motive among buyers? To me, what is sure is just that the unit will be locked up for two years, and this tends to defeat rather than serve the purpose of helping more people solve their housing problems.
Is it not even better, if a White Form buyer immediately releases a purchased HOS flat, for whatever reason, to a Green Form buyer? For whatever reason, reselling his unit to a Green Form applicant will immediately allow a household now living in a public housing unit to realize the dream of buying a home, while at the same time an applicant in the queue will be able to move into the vacated public housing flat. Furthermore, all those waiting in the queue will benefit by moving up by one place. By the same token, I would advise that White Form buyers should be allowed to resell to other White Form as well. Since the latter are qualified HOS buyers waiting to buy, why should anyone disallow their purchases?
Presently, the government has adopted various measures that have effectively reduced the supply of second-hand units, which have traditionally served as the first step on the housing ladder for many. The Special Stamp Duty has already reduced the supply of these units tremendously, effectively preventing a whole spectrum of households from improving their housing conditions-including both existing and potential homeowners. Removing the resale ban will only help, not hurt, the housing cause.
The author is director of the Center for Public Policy Studies, Lingnan University.