Cooperative Opportunity: Learning about the History of “Housing Scheme for Local Government Officers” from Housing Documents
Hong Kong people yearn to purchase flats. Apart from a few who do this for speculative reasons, most people wish to purchase a flat because of the need to have a roof over their heads. Having a property means having roots and having stability. It is a necessary step to start a life and a family. For those who cannot afford to buy, the lucky ones are allocated a public housing flat. Otherwise one would need to rent from the private market. Renters may be forced by owners to move out of the flats. Those who manage to stay may face rental increment pressures. Eventually those who rent will still hope to own a flat. Such is the pressing housing issue in Hong Kong — without property rights there is no protection. Because of this, the whole community is having an impossible property ownership dream.
This property ownership dream by the entire community nurtured the monopolisation of the private housing market by developers. At this stage, 40 percent of the price of a house goes into the pockets of the developers. The government’s high land price policy accounts for another forty percent. Why can property developers monopolise the housing rights of Hong Kong people? Why must one own a property before having housing rights? If I don’t want to be a slave of housing, what can I do?
The Hong Kong housing issue is not a new problem. We can look into history to expand our horizons and find a solution for our current problem. From declassified government documents, we discovered that the British government in the 1950s had more creative housing policies than today’s government. Through a cooperative housing policy, the then government provided selective groups the benefit of building their own houses. They could self-organise a cooperative to own the building. Residents would manage building maintenance and they could live together in the building for several decades. This is perhaps one of the most stable kind of habitation among all housing types. It contrasts sharply with the unstable habitation style of the rental market.
Hong Kong has piloted various types of housing schemes in the past, but we have gradually entered into a public or private housing dichotomy. If we can study the meaningful and progressive housing schemes from the past, not only will we learn about Hong Kong history, we will also broaden our imagination for future housing policies. Archival research is therefore an access point to the force of change.
Build Your Own Flat
The British government developed the Housing Scheme for Local Government Officers in 1952 (Note 1). At the time, a group of Chinese officers demanded financial assistance from the government to build their own homes. After seeking approval from HM government’s Secretary of State, the colonial government in Hong Kong made available capital for land purchase and building loans for civil servants, and provided them with land at discounted prices.
The Housing Scheme was steered by the civil servants. They had to form a small group of at least 10 civil servants and provide a detailed proposal to the government, listing the desired site to build their flats, development blueprints, budgets and repayment arrangements. The applicants needed to prove their ability to pay the loan premium, interests, property rates and taxes, and building maintenance expenses. The government would offer a 50 percent discount on the lowest land price (later changed to 33 percent discount on the lowest land price) and provide a loan for the approved proposals to assist with site leveling and construction costs. The annual rate of the loan was 3.5 percent, repayable every six months for a 20-year period at the longest. The repayment amount is also set at no more the one-fourth of the civil servant’s salary as maximum.
Such an arrangement made it necessary for the building schemes to best use land resources to build the most flats. The government arranged for professionals from the Public Works Bureau to advise on site design and development, empowering applicants to know whether their scheme was up to standard. The Cooperative would own the building after construction, and would protect the housing rights of the inhabitants. The government stipulated that the cooperative buildings cannot be sold or mortgaged, and could only be resided in by current or retired civil servants and their families for a set period or before the government loan was fully repaid.
Cooperative as a Method
This kind of cooperative building method enabled people’s housing rights through government concessions. People did not have to buy expensive private flats from developers. They did not need to join the long waiting list for public flats. The Housing Scheme for Local Government Officers was in place until the 1980s. During that period, it fostered the establishment of over 200 cooperatives, and built over 5000 flats. Residents were free from worries of being forced out by flat-owners. As cooperative housing was affordable, it provided good fundamentals for residents to start a career and a family. However, as residents began to age, the government permitted cooperatives to disband through payment of land premiums. Flats were sold. Many were purchased by developers for the purpose of redevelopment. This led to the disappearance of this unique housing phenomenon.
When facing grave housing situations in Hong Kong, such as nauseatingly high property prices, and inhumanely sub-divided flats, Dr Edward Yiu Chung-yim proposed piloting a cooperative housing scheme at site 37 of Tseung Kwan O after studying many cases of government land concessions and loan provisions. Residents will not own the properties, but also enjoy housing rights. The cost for a 400 square-foot flat will only be one million Hong Dong dollars. Monthly payment for residents will only be 6,000 Hong Kong dollars, which is approximately the market rental rate for a 150 square-foot flat in the city centre.
If Hong Kong needs to break away from the housing deadlock and transition into a place where people feel stable enough to start a life, the government needs to change its high land price policy, and allow society to develop cooperative buildings with low prices. Respecting that every person has the basic right to accomodation is an essential element of Hong Kong’s future housing policy.
Neon Yiu Ching Hei
A member of Liber Research Community, graduated from the Faculty of Public Policy and Administration of Hong Kong Polytechnic University. His concerns for the problem of sub-divided flats led him to research on various socio-political housing policy issues, including housing finances and alternative housing practices.