Richard Wong

The View | To solve a uniquely Hong Kong conundrum, let all public renters buy their flats

The Tenants Purchase Scheme has had a curious effect on Hong Kong’s labour market. Renters, instead of homeowners, have higher jobless rates, probably to avoid the penalty for being well-off tenants. Here is one way to fix the problem

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A cylindrical public rental block in Lai Tak Tsuen estate in Tai Hang. Photo: Sam Tsang

Richard Wong

Published: 9:04am, 27 Feb 2019Updated: 9:18am, 27 Feb 2019

The Tenants Purchase Scheme (TPS) was introduced in 1998 to help achieve the government’s policy goal of 70 per cent home ownership in Hong Kong. Since then, 140,298 units have been sold to sitting tenants, representing a substantial stock of public assets worth at least HK$300 billion – an amount much larger than the construction cost of the Sha Tin-Central railway.

It has also had another effect – on the labour market. Census statistics help tell the story.

The 39 public housing estates selected for the scheme were all built between 1982 and 1994, and offered for purchase between 1998 and 2006. Another 60 public housing estates were built in the same period that would remain solely for rental, providing an interesting point of comparison.

According to the 1996 by-census, 186,000 households lived in the 39 future for-sale estates and 209,000 households lived in the 60 rental estates. Among typical working-age adults, defined as between 18 and 64 years old, the employment picture was similar for both types of housing. But with the roll-out of the Tenants Purchase Scheme and beginning with the 2001 census, the numbers began to change.

Over time, both men and women in the for-sale estates had significantly higher labour force participation rates and lower unemployment rates than those in the rental estates.