President Xi Jinping urged Hong Kong to solve the city’s chronic housing issue as listing it on top of the “biggest aspirations” of its people to lead a better life.
His remarks on celebrating the 25th anniversary of Hong Kong’s returning to the motherland echoed those addressed in his first inspection tour of the special administrative region in 2017, when he said, “Homes are for living, not for speculation.”
CP Ho, a former member of the Chinese People’s Political Consultative Conference, reminded me of President Xi’s remark when I interviewed him about housing and homelessness in Hong Kong for my upcoming book, Custom Maid Backspin for New World Disorder.
“There is hope,” said CP. “Once the housing issue is resolved,” he added, “Hong Kong will do well and prosper; it has good feng shui.”
Beijing has taken note of the “kingmaker” role Hong Kong’s property tycoons have played in local politics. It didn’t like what it saw. So it initiated a revamp of Hong Kong’s electoral system to reduce their influence on the Election Committee before the committee elected John Lee Ka-chiu to succeed Carrie Lam Cheng Yuet-ngor as Hong Kong’s chief executive starting this July 1.
State media has identified housing as one of the underlying causes of the protesters’ anger and frustration in the 2019 half-year-long anti-establishment street violence and, like me, has criticized the property tycoons for sitting on massive land banks while Hong Kong suffered from a housing shortage, and high rentals that low- and middle-income people cannot afford.
Beijing has, meanwhile, suggested that the government use the Lands Redemption Ordinance to retrieve privately leased land for private use. Vice-Premier Han Zheng made it clear that the central government wants to see the housing problem solved.
So the change of leadership in Hong Kong might well be the right time to tackle the issue from within. Hopefully, the new chief executive, John Lee, will move on it as a priority — as promised during his election campaign.
To succeed, Hong Kong must first alleviate its housing shortage and homeless crisis. So (John) Lee’s early initiative will not only go a long way to solve the housing crisis, but also the political turmoil, as people with secure housing will get back to business
To succeed, Hong Kong must first alleviate its housing shortage and homeless crisis. So Lee’s early initiative will not only go a long way to solve the housing crisis, but also the political turmoil, as people with secure housing will get back to business. When success on this front becomes well-founded, the entire concept can become the model and solution for other societies, particularly the Chinese mainland and America, which face serious housing and homeless issues — America more so than China.
In America, homeless people are sleeping on the streets within eyesight of the White House — and fancy neighborhoods in Boston, Los Angeles, New York, and other cities across the country.
A primary reason for the street protests in Hong Kong, in Europe, in the US, and globally, is the housing crisis brought on by the greed of the entrenched and politically connected developers and landlords.
In 2021, Hong Kong was ranked as the most expensive place on Earth for housing for the 11th year, with the average waiting time for public housing at a record-high 5.7 years.
The Hong Kong Special Administrative Region government have started to acknowledge the crisis by imposing rent control measures on subdivided flats. However, rent control will not work in the overall housing, retail, industrial, commercial, agricultural or religious property sectors. Not in Hong Kong, nor anywhere else. Never has. Never will. I have written at length on the history and reasons for its failure.
While nobody wants the housing crisis to continue, owners do not want their assets to depreciate or land to be resumed.
It is up to Chief Executive John Lee, with the blessing and support of President Xi Jinping, to propose a bold new alternative housing solution for Hong Kong — a global model and solution.
Several proposals have been put forth by various think tanks, elected officials and consultancies about the availability of land for housing. None, however, has proposed a funding solution that benefits all parties; one that makes housing affordable to homeowners and renters, and also gives the developer-landlord a reasonable return on investment.
The solution I propose is that Hong Kong introduce a “Housing Subsidy Act” (HSA), an idea I first proposed in July 2021 as the Rent Subsidy Act, not only for Hong Kong, but also for several cities in the US. Numerous focus groups I organized with representatives from different sectors of the community that I propose to subsidize in the HSA — religious, financial, charitable and government — were brought together to thrash out their different and often-conflicting and challenging views.
The HSA starts with the premise that no person who wants to buy or rent a home should have to pay more than 25 percent of the income for either a mortgage or rent.
Still, the developer, landlord and seller should be able to make a reasonable return on investment.
The amount in excess of what the person renting or buying the property would pay would be subsidized by the HSA —a private sector-government partnership — through a housing fund, which would be managed by real estate executives and bankers, but not government bureaucrats, and its allocations overseen by a board of directors with representatives from the government, the development sector, landlords, charity, lenders, and citizen donors.
The subsidy would be funded by a group of four parties:
1. Up to 50 percent of the donations would come from self-sufficient religious and charitable organizations of all denominations that enjoy tax-exempt status on the condition that they “provide housing” for the needy, although most of them don’t.
2. Financial institutions, especially those involved in the housing sector making mortgage and construction loans, allocating a few basis points of every loan to the fund.
3. Government agencies, starting with the national, provincial/state, municipality, or village government bodies — and the tax benefits they can offer.
4. Other public or private foundations that want to contribute to the cause.
Collectively, they could provide the bridge financing needed to ensure that homebuyers and renters need not pay more than 25 percent of their income for housing; but developer landlords will get a “reasonable” return on investment. What is “reasonable” is defined by each local government, based on the local market and economic realities.
Starting in Hong Kong, this sustainable housing model can be replicated globally.
The author is a strategic analyst, and contemporary social commentator.
The views do not necessarily reflect those of China Daily.