Under the new policy framework, the provision of assistance to those in genuine need continues to lie at the heart of the Government's housing policy. The Government ensures that all those who cannot afford adequate accommodation in the private market have access to subsidised public rental housing. It is committed to maintaining the average waiting time for public rental housing at around three years and ensuring that there is an adequate supply through a rolling construction programme run by the HKHA. The actual number of units to be built is adjusted regularly to take account of the housing demand of low-income families and the turnover in tenancies.

At present, about 2 129 600 people, or 31 per cent of Hong Kong's population, live in public rental housing estates of the HKHA and the Hong Kong Housing Society (HKHS)³. At year-end, there were 94 100 households on the waiting list for public rental housing and the average waiting time was about two years.

Rent Policy

It is the long-established policy of the HKHA to set public housing rents at affordable levels. Other factors taken into consideration in determining rents include comparative estate value, estates operating costs, rates and the HKHA's financial position. At present, rents are inclusive of rates, management and maintenance costs, and range between $250 and $3 810 per month. Tenants pay, on average, 53 per cent of the assessed market rent (inclusive of rates).

In 2002, two public housing tenants applied for a judicial review of the HKHA's decision to defer rent reviews. The Court of First Instance ruled in favour of the tenants in July 2003. The HKHA subsequently lodged appeals against the court's ruling and in November 2004, the Court of Appeal allowed the HKHA's appeals by a unanimous decision. The case was heard by the Court of Final Appeal and in November 2005, the court handed down its judgment in the authority's favour.

The judicial review cases underline the importance of identifying a rent adjustment mechanism that is more rational and better reflects tenants' ability to pay as well as helping to promote the long-term sustainability of the public housing programme. In this connection, an ad hoc committee set up by the HKHA is undertaking a comprehensive review of the authority's domestic rent policy. This committee will consult the public on its initial findings before drawing up recommendations on how the current domestic rent policy is to be improved.

Rent Assistance

The Rent Assistance Scheme was introduced by the HKHA to provide assistance to its public housing tenants facing temporary financial hardship. Eligible tenants are offered a 50 per cent rent reduction. To assist more needy families, the HKHA revised the scheme in October 2002 and the eligibility criteria for elderly households were relaxed. Tenants affected by redevelopment are also allowed to apply for rent assistance immediately upon rehousing. By the end of 2005, 29 795 households had benefited from this scheme.

In late December, the authority also further relaxed the eligibility criteria for non-elderly households in line with those applicable to elderly households, a move which will take effect in March 2006. These households will be entitled to a 25 per cent rent reduction.

Better-off Tenants

Better-off tenants are required to pay higher rents. At the end of December 2005, there were 17 991 households paying higher rents. The subsidy saved through charging under this scheme amounted to about $190 million in 2005. In addition, tenants living in estates for more than 10 years with both household income and assets exceeding the prescribed limits, or choosing not to declare household assets, are required to move out. In 2005, 546 better-off tenants, including 428 households which acquired their own flats under the various subsidised home-ownership assistance schemes, returned their public rental housing flats to the HKHA.

Allocation

In 2005, 42 567 rental flats were allocated by the HKHA and the HKHS to various categories of applicants. Of these, 26 301 were new flats and 16 266 were refurbished: 65.9 per cent were allocated to waiting list applicants, 4.86 per cent to tenants affected by the HKHA's Comprehensive Redevelopment Programme, 0.81 per cent to families affected by clearances, 2.46 per cent to junior civil servants, 22.43 per cent to sitting tenants for transfers (including overcrowding relief), and the remainder to victims of fire and natural disasters and compassionate cases recommended by the Social Welfare Department.

Flats are allocated in accordance with the order of registration and applicants' choices of district. Applicants are required to satisfy comprehensive means tests (covering income and assets), not to own any domestic property and to meet the residence rule in Hong Kong before being admitted into public rental housing. To speed up the letting of some less popular flats, the HKHA launched the Express Flat Allocation Scheme and invited all eligible applicants on the waiting list to select a flat from among the vacant flats with prolonged vacancy periods in all districts. During the year, 1 624 households were successfully rehoused under this scheme.

3	The HKHS is an independent, not-for-profit organisation established in 1948. It provides subsidised housing to specific target groups at affordable rents.