Hong Kong’s most well-off tenants will be hit in the pocket under new policy

Hong Kong’s Housing Authority has approved the government’s aggressive plan to discourage well-off tenants from staying in public rental flats, adding that the increase in rent will generate about HK$1.5 billion (US$193 million) in extra revenue every year. But authority member Cleresa Wong Pie-yue said on Friday that the main purpose of the adjustment was not to generate more money for the government, but to make regulatory policies fairer. The announcement confirmed the Post’s earlier report that the government intended to raise the rent of well-off tenants in public flats by up to 2.25 times the existing amount. “We have heard from various sources and from the public [that] for quite some time that compared with ordinary public housing tenants, well-off tenants are paying less and this is not quite right,” Wong said, adding those who were able should pay more. Currently, households that earn two to five times the income limit are paying 1.5 times to twice the standard rent. They will have to pay 2.5 to 4.5 times the normal rate after the changes take effect from October 2026. The current income limits for a three-person and a four-person household are HK$24,740 and HK$30,950 a month, respectively. Wong added that ordinary public rental flat residents had to spend about 10 per cent of their income on rent, but well-off tenants only used 7 per cent. She said the rate would increase to about 11 per cent for well-off tenants under the changes. “After the changes in the rental payable by [well-off tenants], they will be paying something comparable to what ordinary public rental housing tenants are paying,” she said. The changes approved on Friday also included lowering the threshold that will trigger an eviction notice. Households with incomes ranging between four and five times the limit will be forced to leave their homes if they continue earning at that level for four years. There are about 1,200 households at this level, with roughly 400 paying their current rent amount for four years or more, according to government data. The first batch of well-off tenants expected to move out as a result of the measures will do so by October 2029 at the earliest, according to Wong. Explaining why authorities decided against further lowering the threshold at which well-off tenants were forced to move out, Wong said the government’s move to regulate subdivided flats was expected to reduce the supply of small homes on the market. She added that there was also increased housing demand owing to non-local talent coming to the city. A source said that the government had settled on giving well-off tenants four years before they had to move as it did not want to force people out right after they had been promoted at work or received a boost to their income. Using a family of four with a total income of HK$135,300 a month as an example, which is more than four times the income limit of an ordinary public housing tenant, another source explained the household would have to pay HK$17,491 in rent under the new system instead of the original HK$8,088. “The rent would make up about 13 per cent of this family’s household income,” the insider said, adding that the family would have to pay about HK$21,000 for a 530 sq ft flat in an area such as Wong Tai Sin. Asked whether the rental adjustment would increase the financial burden on residents renting public housing flats amid the poor economic environment, Wong said that well-off tenants would still have a large amount of disposable income. “Even though the current economic market may not be too good, I think that for this batch of tenants, they are the batch that has most potential to move upwards in our community, so I think they would not be affected by the social economic situation so much compared with ordinary public housing tenants,” she said. The Housing Authority will now also offer further incentives for well-off tenants to move out of their homes by allowing them to retain their “green form” status for four years even after surrendering their flats from October, giving them a higher chance of purchasing subsidised housing. “Green form” status allows public housing tenants to apply to buy subsidised flats. Tenants must surrender rental homes upon successful application. Compared with subsidised housing applicants living in private flats with “white form” status under the Home Ownership Scheme, “green form” applicants normally face much less intense competition. The authority will also increase the quota for “green form” applicants from 40 per cent to 50 per cent starting from the next sale under the scheme. It said it would also explore new sales arrangements so that well-off tenants could stand a better chance of purchasing in-demand flats. But Anthony Chiu Kwok-wai, executive director of the Federation of Public Housing Estates, noted that about 90 per cent of the well-off tenants were in the lowest bracket of earnings that required rent increases. “We understand that the substantial rent adjustment is to reduce the subsidy for well-off tenants and assist those who are more needy … but it undoubtedly increases their financial burden,” he said. He added that the purpose of public flats was not only to provide suitable housing for low-income residents, but also to help them build wealth. Chiu also urged the government to roll out measures to help tenants move up the property ladder, such as a savings scheme for purchasing subsidised homes. Chan Hok-fung, a member of the Legislative Council’s housing panel, said the rent adjustment would be fairer to other public housing tenants. He also supported the government’s move to allow eligible well-off households to keep their “green form” status to purchase subsidised homes in four years after surrendering their rental flats.

Hong Kong’s most well-off tenants will be hit in the pocket under new policy

Rent of well-off tenants in public flats could more than double the existing amount, in addition to some being forced out in four years’ time