Hong Kong must stop letting the well-off hog public rental housing
- Generous income limits and rent subsidies mean well-off households are occupying public housing, forcing the poor to rent from the cutthroat private market. This needs to change
First, the number of households eligible for public rental housing is far too high. For households of up to six people, we calculate that the income limit has increased by 35-60 per cent in real terms since 2006. As a result, the pool of eligible residents has become much larger. In 2006, 34.6 per cent of the population had incomes that qualified them for public rental housing; by 2021, 43.5 per cent qualified.
Second, the rent subsidies are far too generous for well-off tenants. The government offers public rental flats at around HK$2,000 a month, with higher-income tenants having to pay more. But consider this: a non-elderly family of three with a stratospheric household income of HK$100,000 (US$12,800) a month would still only pay double the rent, or around HK$4,000.
Given that the market rent is HK$10,000 or more, this is a massive subsidy of 60 per cent. And such rich public tenants can enjoy this until their household income exceeds HK$124,000 – five times the limit for public rental applications.
It is not an exaggeration to say that well-off public rental tenants are hogging public housing. Even fresh university graduates join the queue. To qualify, workers routinely ask employers for pay reductions when it is their turn to undergo income tests. Few households ever move out.
Population statistics show that public housing is increasingly occupied by the well-off. Even as their household sizes shrank, we calculate that the average real household income of public renters grew by 26 per cent between 2011 and 2021.
From 2006 to 2021, we calculate that Hong Kong added 130,000 public rental units. But the number of low-income public renters did not increase. In 2006, 155,980 public renting households had real incomes in 2006 above the 2021 income limit. In 2021, there were 296,440 such households.
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Hong Kong needs to raise public housing rents for well-off tenants, tighten the eligibility criteria and refocus on building ownership units to help better-off public renters to upgrade and vacate.
Such reforms will put our finances in better order. It will free up public resources for the needy and reduce the wait for public rental housing. The suffering of the most marginal members of our society, who lack safe and dignified homes, will then be relieved.
Michael Wong is an assistant professor at the University of Hong Kong
Jimmy Ho is an undergraduate student at the Chinese University of Hong Kong