Hong Kong must fix Tenants Purchase Scheme’s flaws before any relaunch

When Hong Kong’s Housing Authority launched the Tenants Purchase Scheme (TPS) in 1998, it embodied the city’s aspiration of home ownership for all. Then the chief executive, Tung Chee-hwa, envisioned public housing tenants buying their flats at a discount, transforming renters into homeowners. That year, the first batch of 25,000 flats was rolled out.

In total, 39 estates were included, offering 184,036 flats. The latest Housing Authority data shows that 154,743 of these were sold to tenants. On paper, this looks impressive. In reality, the scheme quickly ran into headwinds, was suspended in 2002 and effectively terminated in 2005. The reasons for its failure remain instructive today, as policymakers debate whether to revive the programme.

The decision to halt TPS was driven by multiple factors. Firstly, there were economic and fiscal pressures. The 1997 Asian financial crisis and 2000 dotcom crash depressed both property prices and tenants’ buying power. And many public rental tenants already had limited ability to take on a mortgage, being either older, reliant on social welfare or on low incomes.