PAPER NO. RHC 49/2002 THE HONG KONG HOUSING AUTHORITY Memorandum for the Rental Housing Committee Fixing of Domestic Rents for New Estates PURPOSE To propose to maintain the best rents (i.e. rents of newly completed blocks) of all districts at the current level up to December 2002, and to fix the rents for 7,127 public rental housing (PRH) flats in six estates which will be completed between July and December 2002. PARTICULARS OF THE NEW FLATS 2. Of the above-mentioned flats, 4,860 are in 13 non-standard blocks which have been transferred from two Private Sector Participation Scheme (PSPS) projects as approved by the Strategic Planning Committee vide Paper No. SPC 31/2001. The remaining 2,267 flats are accommodated in a Harmony and four Small Household s built to rental standards respectively. 3. The standard of finishes and fittings in the PSPS projects concerned, being comparable to New Cruciform s under the Home Ownership Scheme (HOS), is higher than the Rental Harmony and Small Household s. A comparison of the standard provisions in these blocks is at Annex A.
- 2-4. Set out below are details of the flats under consideration - District Estate No. of s Design Standards of Provisions No. of Flats Anticipated Completion Date Urban Po Tat Estate Phase 1 1 Tai Hang Tung Estate 2 Lei Yue Mun Phase 1 Small Household Small Household Rental 620 8/2002 Rental 640 8/2002 1 Harmony Rental 799 11/2002 Tseung Kwan O Kwai Chung Sheung Tak Estate 1 High Prosperity Terrace Small Household 2* Non-standard Rental 208 10/2002 PSPS 760 10/2002 Tin Shui Wai Grandeur Terrace 11* Non-standard PSPS 4,100 10/2002 Total : 6 18 - - 7,127 - * s transferred from PSPS projects CONSIDERATIONS 5. As part of its concerted efforts in assisting PRH tenants in the prevailing economic environment, the Rental Housing Committee (RHC) has frozen the best rents for new estates in the rent fixing exercises conducted between February 1998 and November 2001 Note 1. At its meeting held on 1 November 2001, the Committee endorsed via Paper No. RHC 110/2001 to maintain the best rents of all districts at the current level up to June 2002. Note 1 : The best rents of new rental estates have been maintained at the July 1997 level vide Paper No. RHC 13/98 on 11/2/98, Paper No. RHC 59/98 on 9/7/98, Paper No. RHC 90/98 on 25/11/98, Paper No. RHC 43/99 on 31/5/99, Paper No. RHC 79/99 on 4/11/99, Paper No. RHC 48/2000 on 18/5/2000 Paper No. RHC 105/2000 on 9/11/2000, Paper No. RHC 56/2001 on 31/5/2001, Paper No. 80/2001 on 2/8/2001 and Paper No. RHC 110/2001 on 1.11.2001 and Paper No. RHC 6/2002 on 7/2/2002.
- 3-6. With tenants affordability as the major consideration, rents of new flats are set not to exceed 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 (IFA) per person respectively. Subject to this overriding criterion, other factors such as comparable estate value, location, transportation, management and maintenance costs, and trends in general household incomes are also taken into account in rent fixing. 7. As outlined in Annex A, the PSPS blocks in question have finishes and fittings that compare favourably with normal rental blocks. For example, the living rooms are provided with partitions, the kitchens have wall-hung cupboards and the number of flats per floor is small. The standards of facilities provided in these blocks are in fact analogous to those in New Cruciform s, where rents were fixed at 10% above the district best rent during two former rent fixing exercises conducted in November 2000 (via Paper No. RHC 105/2000) and in November 2001 (via Paper No. RHC 110/2001) respectively. PROPOSED RENT LEVELS 8. On the basis of the above considerations, we have the following proposals. 9. Regarding the district best rents, it is proposed that they should continue to be maintained at the current level up to December 2002, as set out below - Current Note 2 District Best Rent $/sq.m.(ifa) 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 Converted s (Urban) 42.3 Converted s (Tsuen Wan/Kwai Chung ) 40.4 Note 2: The best rent is inclusive of rates, management and maintenance costs; based on IFA.
- 4-10. As regards the rents for the five blocks in Po Tat Estate Phase 1, Tai Hang Tung Estate, Lei Yue Mun Phase 1 and Sheung Tak Estate, we propose they be set at the respective district best rent levels. 11. To reflect the added value for the 13 PSPS blocks in High Prosperity Terrace and Grandeur Terrace, it is proposed to fix their rents at 10% above the best rents of the districts concerned. This is in line with the previous decisions made by the RHC vide Papers Nos. RHC 105/2000 and RHC 110/2001 for New Cruciform blocks. 12. The proposed inclusive rents for different flat types and a summary of their distribution are at Annexes B and C. PROJECTED OPERATING COST 13. A comparison between the proposed inclusive rents and the average projected operating cost of the flats under consideration is shown below - District Estate/Court Proposed Inclusive Rent $/sq.m./mth Average Projected Operating Cost $/sq.m./mth. Urban Po Tat Estate Phase 1 ) ) Tai Hang Tung Estate ) 63.4 ) Lei Yue Mun Phase 1 ) ) ) Tseung Kwan O Sheung Tak Estate ) 55.4 ) 86.28 ) Kwai Chung High Prosperity Terrace ) 67.3 ) ) Tin Shui Wai Grandeur Terrace ) 46.4 ) Note 3 Note 3 : The average projected operating cost includes management and maintenance costs, rates and Government rent, if appropriate.
AFFORDABILITY - 5-14. Based on the reported incomes of the prospective tenants on the Waiting List and other rehousing categories for the period from July 2001 to March 2002, the MRIR is projected to be 16% for the minimum space allocation standard of 7 sq.m. IFA per person when the blocks are ready for occupation three to six months later. As the estimated MRIR is within the prescribed limit of 18.5%, the proposed new rents are considered affordable by the prospective tenants. A breakdown of the estimated rent-to-income ratio (RIRs) at time of intake is as follows - Minimum Allocation Standard [sq.m. IFA per person] Not Exceeding 15% RIR Over 15% to 18.5% RIR Percentage of Households Over 18.5% to 20% RIR Over 20% to 25% RIR *Over 25% RIR 7 42 22 7 13 16 * Those with RIRs over 25% are households who may be eligible for Comprehensive Social Security Assistance. FINANCIAL IMPLICATIONS 15. The proposed inclusive rents for the new flats, if all are fully let, would generate an annual rental income of $159M. However, with the annual operating cost estimated at $261M, there would be an annual deficit of about $102M. PUBLICITY 16. We will emphasize that PRH estates are heavily subsidized and that PRH rents, which are based on IFA calculation and are inclusive of rates and management costs, will remain unchanged for at least three years from the date of first intake. We will also stress that the flats in the 13 PSPS blocks are of better design and have a higher estate value. The proposed rent levels are considered reasonable and are within the prospective tenants' affordability. Low-income tenants who cannot afford the rents of the new flats will be offered flats of cheaper rents.
- 6 - DECLASSIFICATION OF PAPER 17. We propose that this paper be declassified upon approval of the proposals contained in paragraphs 9 to 11 by Members. The paper will be made available to the public at the Housing Authority homepage, the Department's Library and through the Departmental Access to Information Officer if it is declassified. DISCUSSION 18. At the next meeting of the RHC to be held on 27 May 2002, Members will be asked to approve the following proposals - (a) (b) (c) (d) (e) (f) that the rent levels of newly completed blocks in all districts be maintained at the current level up to December 2002; that the rents of the new flats in Po Tat Estate Phase 1, Tai Hang Tung Estate and Lei Yue Mun Phase 1 be fixed at $63.4/sq.m.; that the rents for Sheung Tak Estate be fixed at $55.4/sq.m.; that the rents for High Prosperity Terrace be fixed at $67.3/sq.m.; that the rents for Grandeur Terrace be fixed at $46.4/sq.m.; and that this paper be declassified upon Members' approval of the proposals set out in paragraph 18 (a) to (e). ---0---0---0--- File Ref.: HD(H)RE 7/1/1 RF 5/2002 Date : 17 May 2002
Major Differences in Standard of Finishes and Fittings Annex A New Cruciform (HOS) PSPS Rental Harmony Finishes Kitchen coloured glazed wall tiles coloured glazed ceramic wall tiles white glazed wall tiles non-slip homogeneous floor tiles non-slip homogeneous floor tiles non-slip homogeneous floor tiles Bathroom coloured glazed wall tiles coloured glazed ceramic wall tiles white glazed wall tiles non-slip homogeneous floor tiles non-slip homogeneous floor tiles non-slip homogeneous floor tiles Living Room emulsion paint on plaster (Ceiling & Wall) emulsion paint on plaster (Ceiling & Wall) emulsion paint on skim coat on fairface concrete powerfloat concrete floor finish with monolithic floor screed Corridor homogeneous wall tiles ceramic wall tiles homogeneous wall/floor tiles (Typical Floor) non-slip homogeneous floor tiles homogeneous floor tiles Lift Lobby (G/F) granite wall/floor tiles wall and floor finished with granite. granite wall/floor tiles Fittings Kitchen wall hung cabinet wall hung cabinet no cabinet sink cupboard stainless steel sink with cold and hot water mixer cooking bench & sink unit cooking bench cooking bench constructed with MDF board Bathroom bath tubs/shower area bath tubs with cold and hot water mixer shower area wash hand basin with counter top wash basin on acrylic solid surface vanity top water heater Corridor 10 units per floor 10 units per floor 16-20 units per floor (Typical Floor) Lift Lobby (G/F) aluminium suspended false ceiling suspended metal false ceiling aluminium suspended false ceiling Living Room with partition with partition without partition Others no metal gate/burglar bar no metal gate/burglar bar collapsible gate and burglar bar aluminum drying rack aluminum drying rack no laundry rack (drying rack provided in 1P flat only) RF 5/2002 : RHC49-02EAnnexA-Dif_f&f.xls
Annex B PROPOSED INCLUSIVE RENTS Estate (Incl.Unit Rent) Flat Type (IFA in m 2 ) Harmony Small Household PSPS 1P/2P 1BR 2BR 1P/2P 2P/3P 2BR 2BR 3BR Total No. of Flats *Rent ($) 16.33 34.44 43.26 (16.38-17.65) (20.64-22.90) 41.80 (34.34-38.96) (44.39-48.85) Po Tat Estate --- --- --- 1,110 1,380 --- --- --- 620 ($63.4/sq.m.) Tai Hang Tung Estate 1,120 1,450 --- --- --- 640 ($63.4/sq.m.) Lei Yue Mun 1,040 2,180 2,740 --- --- --- --- --- 799 Ph. 1 ($63.4/sq.m.) Sheung Tak Estate --- --- --- 910 1,140 2,320 --- --- 208 ($55.4/sq.m.) High Prosperity Terrace --- --- --- --- --- --- 2,310-3,220-760 ($67.3/sq.m.) 2,620 3,290 Grandeur Terrace --- --- --- --- --- --- 1,590-2,060-4,100 ($46.4/sq.m.) 1,720 2,120 Total No. of Flats 159 320 320 1,152 288 28 2,764 2,096 7,127 * Rounded off to the nearest $10 RF 5/2002 : RHC49-02EAnnexB.XLS
Annex C DISTRIBUTION OF FLATS AND RENTS Harmony Small Household PSPS Total No. *RENTS($) 1P/2P 1BR 2BR 1P/2P 2P/3P 2BR 2BR 3BR of Flats 901-1000 68 68 1001-1100 159 1,084 1,243 1101-1200 112 112 1201-1300 0 1301-1400 16 16 1401-1500 160 160 1501-1600 820 820 1601-1700 0 1701-1800 1,640 1,640 1801-1900 0 1901-2000 0 2001-2100 820 820 2101-2200 320 820 1,140 2201-2300 0 2301-2400 28 152 180 2401-2500 0 2501-2600 0 2601-2700 152 152 2701-2800 320 320 2801-2900 0 2901-3000 0 3001-3100 0 3101-3200 0 3201-3300 456 456 Total No. of Flats 159 320 320 1,152 288 28 2,764 2,096 7,127 * Rounded to the nearest $10 The range of rents will be $1000 and below $1001 - $1500 $1501 - $2000 $2001 - $2500 $2501 - $3000 $3001 - $3500 0.95% 21.48% 34.52% 30.03% 6.62% 6.40% 100.00% RF5/2002 : RHC49-02EAnnexC.xls