September 8, 2025 · 《HKEJ》
A week before the Policy Address was released, rumours circulated that the government planned to relaunch the Tenant Purchase Scheme (TPS), sparking heated debate across the city. Over the years, many political parties and organisations have repeatedly advocated relaunching the TPS, while others have opposed it. This time, however, the much-hyped move ended with thunder but little rain — the government did not, as rumoured, relaunch the scheme, leaving many citizens puzzled. The authors have studied Hong Kong’s housing policy for years and have written repeatedly that helping young people and the sandwich class move up the housing ladder is the key to solving the housing problem, and that a carefully improved Tenant Purchase Scheme could serve as a pathway for sandwich-class upward mobility. This article unpacks the core issues of Hong Kong’s public housing to respond to public discussion on the TPS.
1. Conditions in Substandard ‘Subdivided Units’ Have Notably Improved
To assess the merits of the Tenant Purchase Scheme, we must first understand the current state of Hong Kong’s public housing policy. Over the past five years, the government’s housing policy has focused on investing substantial resources to build various types of public rental housing (PRH), providing basic accommodation for those in the most urgent need on the PRH waiting list. The data show that the situation of subdivided-unit households lacking basic accommodation has notably improved. According to the 2021 Population Census, there were approximately 110,000 subdivided-unit households. Next year’s PRH supply will more than suffice to meet the demand of every subdivided-unit household moving into PRH. On the traditional PRH front, the government has built close to 50,000 units over the past five years. PRH completions over the next five years are projected at roughly 110,000 units. On the short-term measures front, the government has already completed more than 20,000 transitional housing and Light Public Housing (LPH) units, and expects to provide a combined total of over 50,000 units within two years.
With the large-scale completion of transitional housing and LPH, vacancies have even emerged in transitional housing. As of the end of May this year, projects in urban and extended urban areas had an average vacancy rate of around 12%, while projects in the New Territories had an average vacancy rate as high as 30%. For example, Yee Ting House in Tseung Kwan O began intake in April last year, and by February this year its vacancy rate had reached 45%. San Tin Bunkhouse in Yuen Long began intake in July last year, and by February this year its vacancy rate had reached 65.3%, with only 54 Category A households (those who have waited three years or more) having moved in (11.8%).
Many in the community are concerned about the PRH waiting time. As of the end of June this year, the waiting time stood at 5.4 years. Although this has fallen from the 6-year peak in 2021, it is still not low. Why, then, does the PRH waiting time remain stubbornly high even as transitional housing and LPH are completed in large numbers — and even stand vacant?
Hong Kong is a wealthy city; those in urgent need of housing assistance are not the mainstream of society. The total stock of public housing is already sufficient to house one-third of the city’s population, leading the world. Yet Hong Kong’s private property prices are extremely high. The international public policy consultancy Demographia pointed out that Hong Kong’s housing price-to-income ratio stood at 14.4 last year. The supply of subsidised sale flats (SSF) is also insufficient: last year the White Form SSF waiting time reached as long as 18.2 years, while the Green Form was 9.8 years. Expensive private housing and a shortfall of SSF leave the sandwich class unable to move up.
Young people are unwilling to become “mortgage slaves” and prefer to cut back on work in order to wait for PRH, which keeps the PRH waiting time high. In 2024, 79% of applicants under the Quota and Points System aged below 30 had tertiary education or above.
The sandwich class lacks the ability to move up. They occupy PRH long-term as “well-off tenants,” and many reduce work to avoid being evicted. Although the government has tightened the “well-off tenants policy,” private property prices remain high and SSF supply remains short. The reality that the sandwich class cannot move up has not been resolved. There are reports of PRH tenants who applied for SSF or the Green Form Subsidised Scheme housing multiple times without success. To avoid being affected by the tightened well-off tenants policy, their family members would voluntarily request a pay cut. We believe such cases are not isolated, but a widespread phenomenon among the sandwich class in society.
Therefore, current housing policy must be targeted, focusing on rebuilding the housing ladder and helping the sandwich class move up. Relaunching the TPS, in fact, holds promise as a substantive and achievable pathway for the sandwich class to move up. If PRH tenants can purchase their existing units with affordable mortgage payments, this paves the way for further upward movement into the SSF secondary market through a “flat-for-flat” swap, allowing them to gradually climb the upward-mobility ladder and improve their living environment.
2. The Improved Plan Helps Social Mobility
The SAR government also launched the Tenant Purchase Scheme from 1998 to 2005, selling approximately 184,000 units to tenants. Yet this did not achieve the desired vision. The authors have previously argued that the policy must be improved in the following three respects to avoid repeating past mistakes.
1. TPS units must circulate: The key to rebuilding the housing ladder is the circulation of units. The TPS units launched in the past were difficult to circulate, so TPS families who purchased units merely side-stepped the “well-off tenants policy” but could not continue to move up through “flat-for-flat” swaps. Some TPS family members even re-applied for another PRH unit, lengthening the PRH waiting time. A rigorous academic study by the authors pointed out that vacant and non-circulating TPS units have wasted housing resources, causing Hong Kong to have tens of thousands more subdivided-unit households.
To prevent this from recurring, the authors suggest:
- Allow TPS owners to rent out their units to PRH waiting-list applicants, increasing rental supply, providing more suitable housing for waiting-list households, and improving unit utilisation efficiency.
- Allow TPS owners to “flat-for-flat” swap in the secondary market, giving TPS owners the opportunity to trade up to more comfortable units, while transferring the original units to interested Green Form or White Form applicants.
2. The government should not undersell: In the past, to sell off all PRH units, the government offered TPS units at discount upon discount — with markdowns of as much as 20–30% in some cases. When housing prices rose, some resold at huge profits, transforming from “well-off tenants” into “overnight millionaires.” When relaunching the scheme, the government should not sell at bargain-basement prices, so as to reduce the occurrence of such windfall gains. The government’s goal should be simply to help relatively better-off tenants move up, allowing units to circulate, while ensuring that sufficient PRH units remain for those in need in the future.
3. The government must retain management rights: Previously, management rights were sold together with the units, resulting in two types of ownership within the same building and giving rise to various management issues — including building maintenance, hygiene, and noise — over which the Housing Authority had no control. The Housing Authority should therefore retain management and maintenance powers, and amend legislation or revise land leases to strengthen the demerit points system, addressing management issues through legal means.
Relaunching the PRH Tenant Purchase Scheme was supposed to provide the sandwich class with a pathway to upward mobility, and represents the core reform in this year’s series of measures to help PRH tenants move up. Unfortunately, society has failed to reach a consensus and the government backed off at the last minute. This year’s Policy Address ultimately did not relaunch the scheme; it could only adjust ratios and quotas — the direction is very positive and good, but without a breakthrough component, it falls short of reversing the long-standing lack of circulation in the housing ladder. The authors hope that next year the government and citizens can take on board the above points, actively study, rationally discuss, proactively seek consensus, and carefully design a comprehensive housing reform plan — thereby rebuilding the housing mobility ladder that has been broken for many years, so that Hong Kong citizens and the next generation can better live and work in peace and contentment.
(Translation supported by AI)
Related articles:
- Comprehensive Housing Policy Reform — Promoting Homeownership, Rebuilding the Housing Ladder, and Helping Young People Move Up by Michael Wong, Alex Ngau, Yun-wing Sung
