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Residential buildings stand illuminated around the former Kai Tak airport area, centre, at dusk in Hong Kong, in June. Hong Kong officials should keep one core principle in mind: it should be the government, not developers, that dictates land supply. Photo: Bloomberg

Carrie Lam must see beyond developers’ farmland to really help Hong Kong’s first-time homebuyers

Lo Oiling says if it relies too much on developers, the Starter Homes scheme risks putting too much power in the cartel’s hands. It would be better to utilise the government’s land sale programme, as well as MTR sites, to boost supply

Lo Oiling
Hopes were high that Chief Executive Carrie Lam Cheng Yuet-ngor would provide a timely solution for aspiring homebuyers, especially first-time buyers, when she delivered her maiden policy address on Wednesday. But her new “Starter Homes” scheme is to build only 1,000 residential units for first-time buyers, making some ask why the scheme seems unnecessarily complicated.
There had been a lot of speculation before the address about the scheme and using idle farmland owned by developers as a key source of land for the housing. But Lam failed to disclose any details about conversion of this land. Instead, she picked a residential site in Kwun Tong on the government’s land sale programme as a pilot project. So what happened to the farmland idea? Is it off the table?
Chief Executive Carrie Lam attends a question-and-answer session at the Legislative Council in Tamar on Thursday. Photo: Felix Wong
And, why did Lam avoid giving details about converting the idle farmland held by private developers into housing sites, as she had initially suggested? Some have, after all, claimed that developers will benefit most from this plan, given the potential for collusion. However, Lam has still insisted that the land should come from developers, holders of the biggest land banks in Hong Kong. Looking to them for land resources seems natural.

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But as developers are also land owners, will the initiative end up giving them the key to which sites should be used to build starter homes? And, will they decide when the time is right to apply for land conversion? If a developer were to dictate land availability, what does that mean for homebuyers? Such a system may well sound familiar, especially for those with knowledge of the notorious land application list system. Under this system, a site would only be put up for sale when a developer triggers its sale and offers a reasonable minimum price. The list system is a nightmare for homebuyers – it is the very mechanism that has driven up housing prices because developers control supply.

A man lies on a bed in a cramped subdivided apartment in Hong Kong, in an image that was part of a 2016 exhibition on grass-roots housing titled “Trapped” by the Society for Community Organisation. Photo: SoCO/Benny Lam

With limited information about the scheme, one legitimate question is: if the supply of units relies on private developers’ land banks, will the scheme become a land application list system by another name?

Learning from the bitter lessons of the Donald Tsang Yam-kuen administration, officials should keep one core principle in mind: it should be the government, not developers, that dictates land supply. This is the only way to ensure affordable housing can be provided for aspiring homebuyers as timely as possible.

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Idle farmland could be turned into a valuable source of land supply in Hong Kong. But it doesn’t have to be tied to the Starter Homes scheme. It is estimated that there are about 1,000 hectares of agricultural land in the hands of developers which, if unlocked, could provide accommodation for nearly 600,000 households. As for how to proceed with the conversion of farmland, this should be the work of the newly formed Task Force on Land Supply.
A large area of land in ecologically sensitive Yi O, near Tai O on Lantau Island, is burnt in August 2013. Photo: Conservancy Association
To get the Starter Homes scheme off the ground, the government has to see beyond farmland. If sites earmarked for public housing are not going to be used, the land sale programme is a natural alternative. And, if more land lots are needed, a logical option is MTR Corporation sites.

For more than three decades, the MTRC has been a main source of land and private housing in Hong Kong. However, is has never supplied subsidised units, whether for the Home Ownership Scheme or the sandwich class housing scheme. There seems to be an unspoken rule that the company has no such social responsibility and that subsidised units should not be built on MTR station podiums.

Now, when profit-oriented private developers are being called on to help solve the shortage of accommodation for the middle class, why should the MTRC, in which the government holds a 75 per cent stake, not be considered to provide land resources?

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It can play a meaningful role in helping to address Hong Kong’s housing problem. What is puzzling, however, is that the company seems to be doing the opposite. It has just reduced the number of property projects for tender in the 2017-18 financial year, from eight to three, cutting its potential supply of housing units from 8,100 to 3,000, citing the surge in land premium cases and an increase in home supply.

A general view of construction at the MTR’s West Kowloon Terminus for the Guangzhou-Shenzhen-Hong Kong Express Rail Link, on October 3. Photo: Nora Tam
But there is big difference between land plots secured from MTRC tendering and those from developers. The former come with a specified completion date, whereas private developers decide when to put their completed units on the market.

If Carrie Lam really wants to help aspiring first-time homebuyers, the government should keep open its MTR options. The corporation has the potential to supply some 5,100 units this year. Amid the chief executive’s vow to ensure a steady supply of homes, the government shouldn’t allow this option to slip away.

Lo Oiling is a former journalist based in Hong Kong

This article appeared in the South China Morning Post print edition as: Look beyond farmland to help homebuyers
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