THE HONG KONG HOUSING AUTHORITY. Memorandum for the Subsidised Housing Committee. Domestic Rents for New Estates

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1 PAPER NO. SHC 4/2005 THE HONG KONG HOUSING AUTHORITY Memorandum for the Subsidised Housing Committee Domestic Rents for New Estates PURPOSE This paper sets domestic rents for flats in five new public rental housing (PRH) estates due to be completed between January 2005 and January PARTICULARS OF THE FLATS 2. Of the flats in the five new PRH estates requiring fixing of rents, 800 are in two Flexible blocks and 340 in a Non-standard Block originally designed for sale under the Home Ownership Scheme (HOS) at the planning stage but which have been converted to rental projects during construction and are built to rental standard. The remaining flats are in seventeen New Harmony blocks (five with Annex block) and another 200 flats are in a Small Household block designed and built to rental standard. Standard of finishes and fittings are tabulated at Annex A for easy reference. 3. Shek Pai Wan Redevelopment with its Phase 1 to be completed in April 2005 and Phase 2 in January 2006 is the reception estate for rehousing the tenants of Wong Chuk Hang Estate which is to be redeveloped under the Comprehensive Redevelopment Programme (CRP), with target evacuation date fixed in March Modified Advance Allocation of suitable flats in the reception estate by flat selection by the affected tenants will be conducted soon. To achieve uniformity of rent level within the same estate for the CRP affected tenants upon rehousing, it is necessary to include Shek Pai Wan Redevelopment Phase 2 in this rent fixing exercise. 4. There are altogether five New Harmony blocks (two with annex block) in Kwai Chung Phase 5. Four blocks with annex block in the estate (i.e. blocks 15 to 19) will be completed in February 2005 while the remaining block together with its annex (i.e. Blocks 13 and 14) will be completed in July To maintain a uniform rent level for blocks of the same type within

2 - 2 - the same phase of development in the estate, it is also proposed to include Block 13 and 14 to be completed in July 2005 in this rent fixing exercise. Although it is an established practice to fix rents for HOS transferred rental units at 10% above the district best rents, due to the reason that the flats in Shek Pai Wan Redevelopment Phase 2 and Shek Yam Phase 5 originally designed for sale at the planning stage have been converted and completed to rental standard, no extra rent is proposed for these two projects 5. Particulars of the flats under consideration are at Annex B. CONSIDERATIONS 6 Under the existing policy, rents of new flats are set with reference to the median rent-to-income ratio (MRIR) of 15% and 18.5% of the prospective tenants at the minimum space allocation standard of 5.5 sq.m. and 7 sq.m. internal floor area (I.F.A.) per person respectively to ensure they are within tenants affordability. In recent years, however, the 5.5 sq.m. per person allocation standard has rarely been accepted and the general trend is that fewer households would refuse offers made on a more generous allocation standard for the reason of their affordability being exceeded. Other factors taken into consideration are comparable estate values, location, transportation, management and maintenance costs, trends in household incomes and the state of the Housing Authority s (HA) finances, etc. The current district best rent levels for fixing of rents of new estates are shown at Annex C. PROPOSED RENT LEVELS 7. Having considered the above factors, we propose that the rents for the new blocks built to rental standard in the five estates, viz. Shek Pai Wan Redevelopment Phase 1 and 2, Kwai Chung Phase 3 and 5, Shatin Area 2B Hin Wo Lane (Hin Yiu Estate), Shek Yam Phase 5 and Tung Chung Area 31 (Yat Tung (II) Estate ) be fixed as follows- Proposed Inclusive Rent

3 - 3 - District Estate ($/sq.m./mth) Urban Shek Pai Wan Redevelopment Phase 1& Kwai Chung Kwai Chung Phase 3 & Shatin Shatin Area 2B, Hin Wo Lane 61.2 (Hin Yiu Estate) Tsuen Wan Shek Yam Phase Tung Chung Tung Chung Area 31(Blocks D to G) The proposed rents for different flat types and a summary of their distribution are detailed at Annexes D and E. PROJECTED OPERATING COST 9. The average projected operating cost that includes rates, management and maintenance costs etc. for the new estates concerned is $61.78 per sq.m. per month. AFFORDABILITY 10. Based on the reported incomes of the prospective tenants on the Waiting List and other rehousing categories for the period from 1 October 2003 to 30 Septembe 2004, the MRIR is projected, by using the minimum space allocation standard of 7 sq.m. I.F.A. per person, to be 15.2% which is lower than the MRIR benchmark at 18.5%. FINANCIAL IMPLICATIONS 11. The proposed inclusive rents for the new flats, if fully let, would generate an annual rental income of $351.15M. Although there would be annual operating deficit of about $13.15M as against an annual estimated operating cost of $364.30M, measures are in hand to reduce operating expenses. PUBLICITY 12. For publicity we will emphasize that-

4 - 4 - (a) rents of PRH estates which are inclusive of rates, management and maintenance costs etc. are heavily subsidized; (b) the proposed rent levels are within the prospective tenants affordability; (c) flats of cheaper rents are available for selection; and (d) non-cssa recipient households affected by CRP having rent-to-income (RIR) exceeding 25% upon reprovisioning are immediately eligible for a 50% rent reduction under the revised Rent Assistance Scheme. DECLASSIFICATION 13. We propose that this paper be declassified upon approval of the proposals contained in paragraphs 7 and 8 by Members. The paper will be made available to the public at the HA homepage, the Department s Library and through the Departmental Access to Information Officer when it is declassified. DISCUSSION 14. At the meeting of the Subsidised Housing Committee to be held on 14 January 2005, Members will be asked to approve the following proposals (a) to fix rents for flats in the five new PRH estates as proposed in paragraphs 7 and 8; and (b) to declassified the Paper upon approval of the proposals by Members. Miss Elisa TSUI Secretary, Subsidised Housing Committee Tel. No.: Fax No.: File Ref.: HD(MB) RE 7/1/1 RF 5/2004 (Estate Management Division) Date : 12 January 2005

5 Standard of Finishes and Fittings New Harmony block Non-standard block Flexible Block (Shek Yam Phase 5) (Shek Pai Wan Redev. Ph. 2 Block 6 & 7) Finishes Kitchen * Coloured glazed wall tiles * Color glazed ceramic wall tiles * Coloured glazed ceramic wall tiles * Non-slip homogeneous floor tiles * Non-slip homogenous floor tiles * Non-slip homogenous floor tiles Bathroom * Coloured glazed wall tiles * Glazed ceramic wall tiles * Coloured glazed ceramic wall tiles * Non-slip homogeneous floor tiles * Non-slip homogenous floor tiles * Matt finish non-slip homogenous floor tiles Corridor (Typical Floor) * Homogeneous wall tiles * Full height textural multi-layer acrylic paint on * Wall with multi-layer acrylic paint * Homogeneous floor tiles fair-faced concrete with 200x100mm non-slip (w/ 100mm high homogenous tile skirting) homogeneous tiles as skirting * Matt finish non-slip homogenous floor tiles * Non-slip homogenous floor tiles Lift Lobby (G/F) * Granite wall slab * Coloured glazed ceramic wall tiles * Coloured Glazed Ceramic Wall Tiles * Granite floor slab * Non-slip homogenous floor tiles * Matt Finish Non-slip homogenous floor tiles Living Room * Emulsion paint on skim coat * Wall with emulsion paint on sprayed plaster * Wall with 2 full coat emulsion paint on skim coat on fairface concrete Fittings Kitchen * No cabinet * No cabinet * No cabinet * Cooking bench & sink unit * Stainless steel sink * Cooking bench & sink unit * Stainless steel faced bench top Bathroom * Shower area * Shower area * Shower area * Wash basin * Wash basin * Wash basin Corridor (Typical Floor) * units per floor * 10 nos. of flats per floor * 8 nos. of flats per floor Lift Lobby (G/F) * Aluminium false ceiling * Aluminium false ceiling * Aluminium false ceiling Living Room * Window grilles * Window grilles * Window grilles * Without partition * Without partition * Without partition Others * Drying racks in 1P flat * Drying racks * Drying racks Annex A SHC 4-05_ Annex A

6 Particulars of Flats involved in this Rent Fixing Exercise Annex B District Estate/Court No. of Block Standard of No. of Anticipated Remarks Blocks Design Provisions Flats Completion Date (m/yr) Urban Shek Pai Wan Redevelopment Phase 1 3* New Harmony Rental 2,677 Apr-05 石排灣重建第一期 1 Small Household Rental 200 Apr-05 2 New Harmony Rental 1,598 Jan-06 Shek Pai Wan Redevelopment Phase 2 (Block 4 & 5) 石排灣重建第二期 2 Flexible Rental 800 Jan-06 (Block 6 & 7) Kwai Chung Shek Yam Phase 5 1 Non-standard Rental 340 May-05 石蔭 第五期 Kwai Chung Phase 3 3* New Harmony Rental 2,742 Apr-05 葵涌第三期 Kwai Chung Phase 5 1* New Harmony Rental 1,059 Jul-05 葵涌第五期 4* New Harmony Rental 3,456 Feb-05 Shatin Shatin Area 2B, Hin Wo Lane 1 New Harmony Rental 799 Jan-05 (Hin Yiu Estate 顯耀 ) Tung Chung Yat Tung (II) Estate 3* New Harmony Rental 2,782 May-05 逸東 二 Total: ,453 - Note * 1 with Annex Block SHC 4-05_ Annex B

7 Current District Best Rent Level Annex C District Urban 63.4 Shatin / Tsuen Wan / Tsing Yi / Kwai Chung 61.2 Tai Po / Tseung Kwan O / Ma On Shan 55.4 Fanling / Sheung Shui / Tung Chung 44.8 Tin Shui Wai / Yuen Long / Tuen Mun 42.2 Islands 36.4 Current Best Rent $/sq.m. (IFA) SHC 4-05_ Annex C

8 PROPOSED INCLUSIVE RENTS Annex D Flat Type (IFA in m 2 ) Estate *Rent ($) (Incl.Unit Rent) New Harmony Blocks SHD # Flexible block Non-Standard Block 1/2P (i) 1/2P (ii) 1/2P (iii) 2P 2/3P (i) 2/3P (ii) 1BR (i) (ii) 2P/3P (a)(i) (a)(ii) (a)(iii) (b)(i) (b)(ii) (b)(iii) (a)(i) (a)(ii) (a)(iii) (b)(i) (b)(ii) (b)(iii) Total No. of Flats Shek Pai Wan 1,130 1,380 1,920 2,520 3,110 1,450 2,877 Redev. Ph. 1 ($63.4/sq.m.) Shek Pai Wan 1,130 1,920 2,520 1,598 Redev. Ph. 2 (Harmony) ($63.4/sq.m.) Shek Pai Wan 2,310 2,400 3,400 3, Redev. Ph. 2 (Flexible) ($63.4/sq.m.) Shek Yam 2,180 2,200 2,230 2,220 2,260 2,310 2,940 2,960 3,010 3,000 3,050 3, Phase 5 ($61.2/sq.m.) Kwai Chung 1,060 1,100 1,340 1,860 2,430 3,000 2,742 Phase 3 ($61.2/sq.m.) Kwai Chung 1,090 1,330 1,860 2,430 4,515 Phase 5 ($61.2/sq.m.) Shatin Area 2B 1,090 1,340 1,860 2, Hin Yiu Estate ($61.2/sq.m.) Tung Chung Area 31 Ph. 2 Yat Tung (II) Estate ($44.8/sq.m.) (Shek Pai Wan Ph. 1) (Shek Pai Wan Ph2 -Blk 4&5) (Shek Pai Wan Ph2 -Blk.6&7) (Shek Yam Ph. 5) (Kwai Chung Ph. 3) (Kwai Chung Ph. 5) (Hin Yiu) (Yat Tung II) Total ,360 1,780 2, , , , , ,600 1,600 4, , , ,600 5, , ,453 * Rounded off to the nearest $10 # Small Household Block SHC 4-05_ Annex D

9 DISTRIBUTION OF FLATS AND RENTS Annex E New Harmony Block SHD# Flexible Block Non-standard Block RENTS($) Total No. of Flat 1/2P (i) 1/2P (ii) 1/2P (iii) 2P 2/3P (i) 2/3P (ii) 1BR (i) (ii) 2/3P (a)(i) (a)(ii) (a)(iii) (b)(i) (b)(ii) (b)(iii) (a)(i) (a)(ii) (a)(iii) (b)(i) (b)(ii) (b)(iii) , ,001-1, ,776 1,101-1, ,201-1,300 1,301-1, ,654 1,401-1, ,501-1,600 1,601-1,700 1,701-1, ,801-1,900 2,520 2,520 1,901-2,000 1,686 1,686 2,001-2,100 2,101-2, ,201-2, ,301-2, ,401-2,500 2,240 2,240 2,501-2,600 1,428 1,428 2,601-2,700 2,701-2,800 2,801-2,900 2,901-3, ,001-3, ,101-3, ,201-3,300 3,301-3, ,401-3,500 SHC 4-05_ Annex E 770 2, ,600 5, , ,453 # Small Household Block The range of rents will be: $1,000 and below $1,001 - $1,500 $1,501 - $2,000 $2,001 - $2,500 $2,501 - $3,000 $3,001 - $3,500 Total 1,502 5,363 4,686 2,696 1, ,453