Housing Rent Needs Control

I was interviewed via email by an Apple Daily reporter last week, who asked for my comments on the housing strategy as laid out in CY Leung’s Policy Address.

This was my reply in full (in Chinese):-

梁特首施政報告中之房屋政策給我的印象係:長遠而言,土地房屋供應的陸續增加或會緩和地產霸權對市場的操控, 但弊處係遠水不能救近火!

我特別不明白他抗拒恢復租金管制的理由,他說租管可能產生反效果,但卻無解釋有何反效果;我曾聽過一些反租管人士所持論點,就係租管會令業主們不肯將手持單位放租,從而令整體出租單位減少及租金進一步上升,我祗想反問一個簡單問題,對物業投資者而言,少些租金收入還是完全無收入較為可取?我覺得反租管者祗從私利出發而對無殼蝸牛毫無同理心,亦可說是歪理連篇。

若要認真解决低收入人士之燃眉居住問題,最直接及最合理方法莫過於立刻實施針對中小型單位及劏房之租金管制。

紐約市自1969年以來施行租金穩定法例 (Rent Stabilization Law), 其目的在幫助低收入人士租住居所,一向行之有效,值得梁政府細心研究及仿傚。

Translated Version:-

The impression I get from the CE’s Policy Address on his housing strategy is that for the longer term, gradual increases in land and housing supply may perhaps serve to slightly loosen the property cartel’s tight grip on the property market; however, supply increase, which cannot happen overnight, is hardly an antidote for quenching the immediate housing thirst.

I am particularly puzzled as to why the CE resists reviving rent control. He kept saying that it might be counter-productive, but fell short of an explanation. People who are against rent control have a theory. They hold the view that rent control would discourage property owners from letting out their rental properties, which would thus put a squeeze on the number of available rental units and force up rents further. My only question is: from a property investor’s standpoint, which would be a preferable option: getting a little less rent or getting no rent at all? It seems to me that those rent control naysayers are just being selfish and totally callous towards the plight of people seeking (but not finding) affordable rental housing and their theory is flawed.

In order to help the low income group to get affordable shelter, the most direct and most rational solution would be to impose rent control targeting medium- to small-size flats and subdivided flats.

New York City (the bastion of capitalism not unlike Hong Kong) has been operating a Rent Stabilization Law since 1969, aiming to help low- to middle-income people get/remain in affordable rental homes. (One condition for the law to be operative is when the city’s rental vacancy rate is less than 5%.) That law may be worth studying.

Link for reference:-

http://en.wikipedia.org/wiki/Rent_control_in_New_York

Postscript:-

In view of the stratospheric level of property prices and rents now prevalent, giving home renters some sort of protection against obscene rent increases and possible eviction would obviously be a more prudent measure than luring them into the trap of purchasing homes (even subsidized ones) beyond their means at or near a price peak. Longer term, renting should always remain an available alternative to purchasing with appropriate regulations giving tenants security of tenure and protection from unreasonable rent increases demanded by landlords. Obviously, the rent control regulations that served Hong Kong so well pre-1997 were abandoned at the behest of vested interests.