Housing in Hong Kong

The Small House Policy, introduced in 1972, guarantees male indigenous villagers a grant to build his own house. It has been described as an unsustainable policy due to shortage of land; as noted by a professor at Chinese University, "The problem that has to be faced is that of sustainability. Sooner or later, there will not be enough land to satisfy a potentially endless pool of claimants."[12] Though Carrie Lam has called for an end to the policy,[13] the Heung Yee Kuk, which represents villagers, has spent resources to challenge changes to the policy.[14] According to a SCMP report, 5,000 hectares, representing about 20% of all urban space in Hong Kong, is locked up for these low-rise developments,[14] rather than being used for high-rise developments which would increase the supply of housing.[15]

The Hong Kong Garrison of the PLA occupies 2,750 hectares of land across Hong Kong, land that has been reported to be underutilized and could be used for housing instead.[16] In particular, the Castle Peak / Tsing Shan firing range occupies 2,263 hectares, or around 80% of all PLA land area.[17][18]

Predominantly in the New Territories, the Legislative Council found that active brownfield sites occupy 1,414 hectares of land, with inactive brownfield sites occupying an additional 165 hectares.[19] A government-appointed task force surveyed the public and found that developing brownfield sites was one of the most favored options for developing new housing.[20] The Liber Research Community estimated that almost 90% of businesses that use brownfield sites could be easily relocated to multi-story buildings, freeing up land for housing.[21]

Large developers own large amounts of rural land in Hong Kong, land which could be used for housing. Developers have been estimated to hold at least 1,000 hectares of agricultural land just in the New Territories, equivalent to at least 107 million square feet.[22] In 2019, the government announced that it would seize a total of 7.3 million square feet of land (67.8 hectares), including 1 million square feet (9.3 hectares) of underutilized land from Henderson Land Development.[23] SCMP found that large developers hold vast amounts of rural land in their land banks,[23] with Henderson owning 44.9 million square feet (417 hectares) of rural land at the end of 2019.[24]

Land is also used by private sports clubs, organizations which only pay a minimal amount of money for the government-subsidized land they occupy under "private recreational leases." 27 private recreational leases are used by 24 private sports clubs occupying a total of 828 acres (335 hectares).[25][26] This includes the Hong Kong Golf Club in Fanling, occupying a 170 hectare site which the Planning Department estimated could be developed into 13,200 homes, enough to house 37,000 people.[27][26] The Hong Kong Golf Club paid a total HK$2,500,000 in 2017 for rent to the government, only 3% of actual market value,[26] meaning the other 97% is subsidized by the government. The Golf Club charges individuals a full membership fee HK$17,000,000[28] which means a single person's full membership fee covers almost 7 years of rent for the entire club. In another example, the Hong Kong Gun Club pays a total HK$1,000 a year to the government despite operating on a 6.5 hectare site and charging individuals a lifetime membership fee of HK$300,000.[29]

The government collects a significant portion of its revenue from housing, specifically from stamp duty collection and land premium. As stamp duty is based on transaction price, higher transaction prices generate more income for the government, giving the government a conflict of interest when seeking to reduce the price of housing. CNBC has reported on the conflict of interest, saying "If property values drop, the government can’t generate as much revenue, meaning there’s little incentive to seriously curb Hong Kong's cost of housing."[30] As noted in the Routledge Handbook of Contemporary Hong Kong, "The enormous land sales income is made possible because of the existence of a highly lucrative property market, which is itself the result of the government's 'high premiums, low rents' policy."[31]

According to the Legislative Council, in recent years, housing-related revenue has accounted for anywhere between 27.4% - 42.0% of total government revenue.[32]

The One-way Permit allows up to 150 mainlanders a day to permanently move to Hong Kong, a policy that increases demand and pricing for housing.[33] In a 2019 research study named "A Tale of Two Cities: The Impact of Cross-Border Migration on Hong Kong's Housing Market," empirical research determined that 3.67% of all purchases were made by those from mainland China. The study notes that "We provide additional evidence that mainland Chinese buyers create an upward price momentum in Hong Kong’s housing market. Although their percentage is only 3.7% of the entire buyer population, the momentum they create can be quite influential and drive up the market."[34]

Due to the high costs of housing, some people in Hong Kong have found both legal and illegal means to minimize costs or increase the size of their property.

Newman Investment, a subsidiary of the Liaison Office, has been purchasing property without paying stamp duty, even though Newman is a registered private company.[35] It has been found to have been exempted from several hundred million HKD in stamp duty in the past few years,[36] meaning the government has subsidized purchases for Newman, and that even Beijing's Liaison Office does not want to pay the normal costs of stamp duty.

Stamp duty can be evaded or minimized in other ways, including methods used by Secretary of Justice Teresa Cheng and her husband, Otto Poon Lok-to. Even though Cheng already owned other properties, one of her later purchases was entitled to the "first-time buyer" stamp duty as her earlier purchases were registered to companies she owns and not her directly, saving her HK $6.7 million in stamp duty.[37] Her husband, Otto Poon Lok-to, used another method to escape HK $10 million in stamp duty by purchasing a company that owned a flat at 1 Robinson Road, giving him ownership of the flat (via ownership of the company) without paying any stamp duty.[38]

Approximately 25% of all residential property in Hong Kong has been illegally modified to add extra space or other features.[39] Even several high-profile government officials have been caught with illegal structures in their properties, including Secretary of Justice Teresa Cheng, former Chief Secretary Henry Tang Ying-yen, and former Chief Executives Donald Tsang and CY Leung.[39]