LCQ7: Participation of private developers in the development of subsidised housing
22.2.2023

Following is a question by the Hon Chan Hok-fung and a written reply by the Secretary for Housing, Ms Winnie Ho, in the Legislative Council today (February 22): Question: The Chief Executive has stated in the 2022 Policy Address that the Government will introduce a new Pilot Scheme on Private Developer Participation in Subsidised Housing Development (the Pilot Scheme) and, from the next financial year, three sites will be put up for tender in batches for developers to build subsidised sale flats which will be sold to eligible persons at a specified discount rate from the market price. The Pilot Scheme will also encourage developers to apply for rezoning of their own private land for the development of subsidised sale flats. In this connection, will the Government inform this Council: (1) of the differences between the Pilot Scheme and the Private Sector Participation Scheme (PSPS) introduced in 1977 in terms of, for example, eligibility criteria, prices of flats, specified discount rates from the market prices, alienation restrictions and ancillary facilities of housing courts; (2) of the roles to be played by developers under the Pilot Scheme; the incentives in place to encourage developers to participate in the Pilot Scheme and rezone their own private land (especially those lots in the urban areas easily accessible by public transport) for the development of subsidised sale flats; whether it will encourage developers to consider building subsidised sale flats with the mode adopted by non-profit-making social enterprises, so that members of the public will be able to purchase those flats at more favourable prices; and (3) as it has been reported that due to the varying quality of the flats built under PSPS, the Government is considering not purchasing the flats to be built under the Pilot Scheme at the guaranteed purchase price, whether the Government has assessed the pros and cons of such arrangement, including whether it will reduce developers' interest in participating in the Pilot Scheme? Reply: President, My consolidated reply to various parts of the question raised by the Hon Chan is as follows: As announced in the 2022 Policy Address, the Government will introduce a new Pilot Scheme on Private Developer Participation in Subsidised Housing Development (Pilot Scheme) to encourage private developers to develop subsidised sale flats (SSFs), which will be sold to eligible persons at a specified discount rate from the market price. The Government hopes to tap into private market forces in increasing the overall supply of subsidised housing through the Pilot Scheme. The Pilot Scheme encourages private developers to develop SSFs. If private developers (whether as non-profit-making social enterprises or otherwise) wish to apply for rezoning of their own private land for SSF development, the Government will consider providing concessionary land premium for the relevant lease modification under the relevant policy framework, so as to allow greater incentive for private developers to use their own private land to develop SSFs. To encourage private developers to develop SSFs would help increase the overall supply of subsidised housing. There were many successful cases under the former Private Sector Participation Scheme (PSPS). However, since developers would receive a guaranteed price for each flat regardless of whether and at what price the flat was sold under PSPS, such arrangement had reduced developers' incentive to ensure building quality. With reference to the past experience, the Government will put in place a mechanism under the Pilot Scheme which will provide sufficient incentives to encourage private developers to develop subsidised housing, whilst ensuring the flat quality. On this premise, we do not plan to provide a guaranteed price as sales proceeds for the SSFs to be developed by private developers, or to buy back any unsold units. We are formulating the policy framework and development parameters (e.g. eligibility criteria, discount rate of the SSFs, alienation restrictions, etc) for the Pilot Scheme along this direction. Separately, the Government plans to put up three sites for tender in batches for private developers to develop more SSFs. We will announce the details of the policy framework in due course.