All 750,000 public housing tenants in Hong Kong will have to pay 10% more rental from September 1. The actual average increase will be $170 per month.
As the election of the Legislative Council (Legco) is imminent, objection to the rental increase is bound to become a hot issue for various political parties to solicit votes from public housing residents.
The last rental increase for public housing was in 2014.
Public housing rental is set by a rent adjustment mechanism based on tenants' household income,subject to a review every two years.
The Housing Authority conducted a survey on 50,000 households in 2013-15, which shows the average income of the households has increased 16%. The rent adjustment mechanism stipulates that each rental increase must not be higher than 10%. Hence the Housing Authority has decided for a 10% increase.
In view of the rent adjustment mechanism and relevant data, the rental increase from public housing this time could be said well-grounded and understandable.
According to the Housing Authority, for 75% or 460,000 out of the total 750,000 tenant households in public housing, the monthly rental will only increase by $100 to $200.
Given the $20,900 monthly income of an average public housing household, the rental after the increase will still account for just 9.1% of its income. So the increase is not unbearable.
Furthermore, according to statistics, 17% of the 750,000 tenant households in public housing are CSSA (Comprehensive Social Security Assistance) recipients, whose rentals are covered in total by the government.So the rental increase has no concern with them.
Another 3% are "rich households" with handsome incomes, for whom the rental increase of $200 or $300 a month is trivial.
Hence, the upcoming rental increase for public housing from September itself should not cause any big reaction.
But the timing is unfavourable.
The public housing rental increase happens amid two "unfavourable"factors.
One is that the overall economic outlook in Hong Kong remains not optimistic, and the other is the upcoming elections of Legco and the Chief Executive.
Public housing is a "stronghold" and source of votes to solicit support and votes.
A couple of" savvy" political parties have already gone to the government headquarters to petition for waiving a month's rent for tenant households in public housing.
As a matter of fact, if a month's rent is waived at the same time when rental is increase, then the rental increase would be done for nothing – just like a person taking money out of one pocket and putting it into another.
More importantly, public housing managed by the Housing Authority in fact is already run in the red for a long period of time.
Its financial deficit will reach $1.5 billion this year.
With the 10% rental increase from September, the deficit is expected to reduce to $600 million.
But if one month's rent is waived, the deficit will not be reduced but will jump to $2 billion instead.
The Housing Authority running public housing in deficit for years largely because it cannot make ends meet with insufficient income from rentals.
For each of the 750,000 public housing households, the government has to subsidise $158 every month.
Namely, rents paid by the tenant households are not enough to cover public housing management, maintenance and other expenditures, so much so that subsidies by taxpayers' money is needed.
Tenant households in public housing already enjoy low rental.
If they are unwilling to accept some reasonable rental increase, is it fair for the equally low income households who are still on the Waiting List for Public Rental Housing and have to spend 30%, 40% or even half of their monthly incomes to live in private housing?
Because of this, some economists regard the 10% rental increase for public housing as unfair and propose to raise it to 15%, so as to reduce the burden on taxpayers.
Such a proposal may speak up about what some citizens think.
28 June 2016
