Michael B. WongandJimmy Ho

Opinion | Hong Kong must stop letting the well-off hog public rental housing

Generous income limits and rent subsidies mean well-off households are occupying public housing, forcing the poor to rent from the cutthroat private market. This needs to change

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A man sits outside public housing at Cheung Sha Wan on May 11, 2023. The average waiting time for a public rental flat now stands at nearly six years. Photo: Sam Tsang

Michael B. WongandJimmy Ho

Published: 9:30am, 4 May 2024

It is no secret that Hong Kong’s public rental housing is misallocated, with many well-off households as tenants. Luxury cars can be found in these estates, even as the poorest members of society have little choice but to live in tiny, subdivided flats.

To address this, Hong Kong has in recent months strengthened its enforcement of the income and asset limits for public rental housing. But rule enforcement will only accomplish so much. Our research shows that the rules are far too generous and the cause of the misallocation. To fix the situation, the rules must change.

First, the number of households eligible for public rental housing is far too high. For households of up to six people, we calculate that the income limit has increased by 35-60 per cent in real terms since 2006. As a result, the pool of eligible residents has become much larger. In 2006, 34.6 per cent of the population had incomes that qualified them for public rental housing; by 2021, 43.5 per cent qualified.

Second, the rent subsidies are far too generous for well-off tenants. The government offers public rental flats at around HK$2,000 a month, with higher-income tenants having to pay more. But consider this: a non-elderly family of three with a stratospheric household income of HK$100,000 (US$12,800) a month would still only pay double the rent, or around HK$4,000.

Given that the market rent is HK$10,000 or more, this is a massive subsidy of 60 per cent. And such rich public tenants can enjoy this until their household income exceeds HK$124,000 – five times the limit for public rental applications.

We calculate that Hong Kong’s stock of public rental housing covers only 32 per cent of the population. With demand rising as more become eligible and given the generously low rents, unless supply is greatly increased, the result can only be a shortage. Unsurprisingly, the wait for public rental housing has risen from two years in 2011 to 5.8 years.