SAR to unveil new policy on land, housing

Govt might take proactive approach to tackle complex social, economic issue

As the Hong Kong Special Administrative Region government is getting ready to unveil its land and housing policy in the Policy Address on Wednesday, signals are emerging that the administration will take a more diverse and proactive approach to tackle the city's intricate social and economic issue.

When the Legislative Council convenes meeting on Wednesday, it will discuss the government's proposed vacancy tax designed to discourage developers from hoarding flats.

The proposed tax law was gazetted in mid-September. It targets a levy on newly built flats at a rate of 200 percent of the property's annual rent if they remain unoccupied for six months of the year.

The flats will get a grace period of 12 months after obtaining the occupation permit. The new tax will not apply to vacant properties held by individuals other than developers.

According to the latest government statistics, there were around 10,000 vacant units in the primary market at the end of June. These account for 20 percent of the total number of vacant units in the market as of end of last year.

"Although the new levy will only apply to a small portion of the market, it is still likely to help lift supply that is desperately needed over the near term, with developers accelerating launches of new residential projects ahead of implementation of the vacancy tax," said Henry Mok, senior director at Jones Lang LaSalle Hong Kong, a real estate services firm.

More vigorous measures are anticipated as the government may announce large-scale land resumption program in the Policy Address to boost land supply.

"We believe resumption and speeding up of new town development could become a major focus for the government, and we could see signs of such a scenario in the policy speech," said Jonas Kan Kwok-yu, head of Hong Kong/China property research at Daiwa Capital Markets, an investment advisory firm.

"This could mark the beginning of a change in the housing supply dynamics in Hong Kong," Kan said.

Last month, the Hong Kong government said it would take back 784 plots of private farmland covering 68 hectares in the northern New Territories for new town development in Kwu Tung North and Fanling North, on which 71,800 units will be built when the area is fully developed.

Secretary for Development Michael Wong Wai-lun said the government aims to take ownership of 400 hectares of private land under the Lands Resumption Ordinance over the next five years whereas this law has been invoked 13 times for public rental housing since Hong Kong's return to the motherland in 1997.

The government is said to be considering increasing the supply of flats by stipulating that certain residential flats could only be sold to Hong Kong residents when the government sells certain land parcels to developers.

Meanwhile, the Hong Kong Real Property Federation proposed to the government last week the building of temporary houses in vacant school premises and barge boats since it may take over 10 years to complete a public housing project if it invokes the Lands Resumption Ordinance to reclaim land.