My Article Titled "Hong Kong's Land Policy: A Recipe for Social Trouble"

This article was published in January 2011 in the Hong Kong Journal:

Link to the article

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.

   

HKU Symposium Speech

Here's the link to my Asia Sentinel blog post containing a translated excerpt of my speech, which was delivered on November 14, 2012 in Cantonese to an audience of HKU students:-

http://www.asiasentinel.com/index.php?option=com_content&task=view&id=4989&Itemid=320

Caixin Media Interview 財新媒體專訪

Here's the link to the interview text titled "潘慧娴：香港被地产商操控背离市场经济":-

http://special.caixin.com/2012-04-28/100383246.html

Development and the Environment

In Ordinary Gweilo’s post “Out through the Window”, he says: “In Hong Kong (and large parts of China) that means designing buildings that can be kept cool in the summer without excessive use of air-conditioning. It's not happening, is it? Developers prefer to throw up apartments with thin walls and hardly any insulation. Even if you are sceptical about global warming, surely it has to be a good thing to be cooler in the summer and warmer in the winter without having to pay a small fortune to CLP or HK Electric?”

Another blogger Daai Tou Laam has a post “Government Listens to Elite, Masses Can Suck on a Tailpipe” where he delivers a news release about the Town Planning Board’s rejection of an application by the environmental group, Green Sense, to reduce the density of a West Kowloon site and to include a 10-meter wind corridor in the proposed development. The rejection apparently came through because of objections from the developer and owner of the site, Sun Hung Kai Properties, on grounds that the application infringes on their private property right and could threaten investor confidence.

Then there was Li Ka Shing’s comment on TV that if the density of a development site were reduced, it would adversely impact government’s treasury as well as citizens’ income.

Here are some observations:

Thin walls without any insulation means less quantities of concrete and would be a plus on cost-savings for developers. Air-conditioning charges would be the homeowners’ or tenants’ liability once the built apartments are sold, and thus are not the developers’ concern.

Lower density eats right into developers’ profits and is and must remain a taboo. Developers would naturally not want to comply with any of the environmentalists’ requests that would cost them more money, especially if market conditions do not allow them to pass on the additional cost to consumers.

Li was not wrong in pointing out that government would also stand to lose in terms of land revenue as lower density on sites would mean lower land premium receipts for government.

Can it be any clearer that from the developers’ standpoint, cost and profit concerns always trump environment concerns?

On the other hand, if there are no specific environmental regulations either in the building code or in the lease conditions, then a developer does not have any legal responsibility to comply. By the same token, based on the concept of the rule of law, government is also contractually obliged to let a developer build to whatever density ratio that is written in the Conditions of Sale (i.e. lease conditions) of a site and under current building and planning regulations once that site is sold (as in the above case).

All in all, the above situation and incidence suggest there is an urgent need for a revamp, with public input, of existing land development policy, building and planning regulations in light of the growing social demand for greater efforts on environmental protection and more livable neighborhoods. It may also be time for government to review the sustainability of a land revenue-reliant fiscal structure.