Public housing gone wild

[iflylow]

Hong Kong housing projects host wealthy tenants - Asia Stocks to Watch - MarketWatch

Asia Stocks to Watch

June 26, 2012, 6:46 p.m. EDT
Hong Kong housing projects host wealthy tenants
Fancy cars, rich lifestyles mark welfare system gone wild

By Chris Oliver, MarketWatch

Chris Oliver / MarketWatch
A Hong Kong public-housing estate towers against the sky in the Wa Fu district. Public housing is a matter of heated debate in the city, as some residents are far from poor but still enjoy the subsidized rents offered by the government.
HONG KONG (MarketWatch) — An embarrassment of riches dotting the car parks of Hong Kong’s welfare public-housing projects is helping to color a debate in this iconic port city of free-market virtues.

Scores of BMWs, Mercedes Benzs, Land Rovers even the occasional Porsche sit parked in housing projects across the city, highlighting what some critics argue is a major problem with the city’s welfare housing policy.

Luxury car ownership among tenants, they say, is symptomatic of shortcomings of a government-subsidized housing scheme that never really forces anyone to move out — even when their fortunes change for the better.

“A lot of guys have become wealthy while in housing estates and, strictly speaking, should be evicted, but no government has dared to do that in the past” said local journalist and TV talk show host Michael Chugani.

In some cases, what can be regarded as middle-class families reside in public housing. And the average monthly rents of $1,248 Hong Kong dollars ($161) have led to what Chugani calls “enhanced buying power,” enabling households to splurge on goods that can include designer hand bags, foreign holidays and overseas university educations for their children.


Chris Oliver / MarketWatch
A Mercedes Benz sits in a parking lot at a Hong Kong public-housing estate in the Wa Fu district.
For the most part, there’s been little political will on the part of government to tackle the thorny issue, due to concerns such moves could stir deep resentment.

“If any political leader comes up and says ‘you need to get out’, they’ll lose those votes,” Chugani said.

The issue isn’t really new, but the topic returned to the spotlight after the Housing Authority, the government bureau which oversees welfare housing, pushed ahead with plans last month to raise rental charges by 10%.

Protests against the move by some housing-project residents touched off a wave of anger from the broader community, who say have they’ve had to bear an unfair burden of soaring inflation in private residential prices and rents at a time of weak or flat wage growth.

“I’m paying for these jerks who live in public housing, and they can go and buy a Gucci bag and a car, and I can’t afford it,” Chugani said.

The English-language daily South China Morning Post’s Jake van der Kamp blasted what he labelled a “culture of entitlement,” and urged readers of his column to “check out the cars in the car parks” for a reality check on the financial well-being of some public-housing residents.

On an early morning talk show last month, local legislator Alan Lee, acknowledged some housing-estate residents were “well off.”

One problem, said Lee, who is affiliated with the pro-democratic Civic Party, is that many families are afraid to move out of the welfare system because they’ll lose the right to purchase a government-subsidized apartment.

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Untouchable issue

Designed to help the “middle-class poor,” according to one legislator, the scheme entails government-built apartments that can be purchased at a 30% discount to market rates. Waiting lists for these homes, however, can take years.

In spite of the lack of universal suffrage in Hong Kong, the sheer size of the welfare housing constituency has meant few of the city’s former leaders — either governors under British colonial rule, or chief executives since the port’s 1997 return to China — have seen sense in delving into the affairs of public-housing tenants.

About half of Hong Kong’s population, or 700,000 households, live in government housing of some type. That includes 2.1 million people in public rental estates (about 30% of the population), and another 1.2 million (about 17%), who live in subsidized ownership apartments.

The origin of this situation can be traced back to the 1950s when dangerous conditions in squatter camps prompted authorities to do more for refugees fleeing mainland China to what was then a British territory.

Today, applicants are assessed on their income and assets before being placed on a wait list, which currently takes close to 2.5 years, according to the government. About 176,000 households are currently in line for such housing.

However, once in, critics say, there’s limited follow-up to prevent abuses.

One individual told MarketWatch his family moved out some years ago but managed to keep the keys to the government apartment where he grew up, which they now use as a storage facility.

Another woman described how she’d spent her entire childhood in public housing while her parents retired early by living off the income from multiple properties which they owned and rented out at market rates.

The woman said her mother, who still resides in government housing, fought a two-year battle with authorities after it was discovered she was a property owner. Under a recent agreement, the woman’s mother, who has pared her property holdings, will be allowed to remain in public housing but will have to sell her other apartment.

Once entering the welfare system, households aren’t required to make further declarations of income to the welfare authorities for 10 years. New declarations are required every two years thereafter.

One big drawback is that households submit information to auditors during these surveys knowing that government departments won’t cross-check the information with income statements filed with the Revenue Department — Hong Kong’s tax authority — owing to privacy ordinances that prohibit disclosure of personal information between government departments.

Even for households whose income exceeds allowable limits, the penalties are soft. Actions can include a doubling of rent, plus some additional fees. The result is that total housing costs are still well below what can be found in the private market.

Those found to be too wealthy can be forced under law to vacate public housing, although in practice there are few known examples where the government has gone the distance in disputed cases.

The Housing Authority said 46%, or 334,000 households, have been tenanted for more than a decade. Of these, 22,900 households, or about 7%, are required to pay extra rent.

The government says it’s doing its best under the circumstances to get long-term tenants to leave the system, aware of the long waiting list for housing, particularly from recent immigrants.

“The Housing Authority is committed to ensure that the limited housing resources are allocated to families in need,” a Housing Authority spokesman said in response to an email enquiry.

Still, others say offenders tend to get off lightly, partly because the government uses cheap housing as a way of smoothing over social tensions between the city’ haves and have nots.

Change unlikely

Lawmaker Lee Wing-tat acknowledged that housing policy involves complex social and political issues, with many of those starting out in the city having little hope of ever climbing on to the property ladder without government assistance.

Chances of fixing the system aren’t bright, however, with some viewing incoming chief executive Leung Chun-ying , who will take office on Sunday and be formally sworn in on Monday, as unlikely to impose major reforms.

Leung was voted in under a so-called “small circle election” — with only a select group of political and business leaders voting. But the election earlier this year is slated to be the last before Hong Kong adopts a universal-suffrage voting system for the 2017 elections.

Local journalist Chugani sees Hong Kong’s working class groups as holding more sway over Leung than they did over prior generations of the city’s leadership.

A building surveyor by training, Leung — who’s been criticized for an allegedly pro-Beijing stance on civil liberties — beat out a rival candidate favored by the city’s business elites.

“He has grass-roots support, and the last thing he wants to do is alienate that group of people,” Chugani said.

[chingleutsch]

And this post is on the "Working in Hong Kong" board or an expat website because ???

[HowardCoombs]

Where is this "Wa Fu District", I'm not at all familiar with it.
I wonder if they mean Wah Fu, one of the oldest public housing estates around...

[imparanoic]

Where is this "Wa Fu District", I'm not at all familiar with it.
I wonder if they mean Wah Fu, one of the oldest public housing estates around...

transliteration is never 100% correct or accurate, 華富 can transliterated from cantonese to different versions in english, 荃灣/tsuen wan/chuen wan is another example, in fact, even the hk government does not have an official reference for romanisation of chinese place names, however, the usual names are generally accepted transliterated names, but alternatives are not incorrect either, unlike the official mandarin pinyin system.

another example is 麻雀嶺 which known in english as ma cheuk leng and ma tsuek leng

[Watercooler]

Where is this "Wa Fu District", I'm not at all familiar with it.
I wonder if they mean Wah Fu, one of the oldest public housing estates around...

Wa Fu estate is in Pokfulam, but that immediate area around the estate is colloquially called "Wa Fu":

Wah Fu - Wikipedia, the free encyclopedia

It is not an official "district", just the name some locals refer to for that specific area of Pokfulam, hence the confusion.

[Mat]

and yet we hear day after day on Geoexpat that Housing is expensive in HK :-P

[HowardCoombs]

Granted and I have come across some of those variations - but you'd think that a journalist writing a piece would do a bit of homework (takes a few secs on Google) to pick the transliteration that is most commonly used
Wah Fu Estate - Wikipedia, the free encyclopedia

Now, shall we go to Mongkok or was it Wonggok

[carang]

hung hom vs hong hum

[Watercooler]

Granted and I have come across some of those variations - but you'd think that a journalist writing a piece would do a bit of homework (takes a few secs on Google) to pick the transliteration that is most commonly used
Wah Fu Estate - Wikipedia, the free encyclopedia

Now, shall we go to Mongkok or was it Wonggok

I think you over-estimate the ability of your average journalist...

[mid_gen]

hung hom vs hong hum

That one drives me mad. I always say Hong Hum these days but it's quite often met with blank stares from westerners. Why would they do it like that???