Unfair Cooling Measures Would Only Create More Resentment
辣招不公平 民怨累積增
Ihave previously opined in my column that the administration must make it its priority to increase land supply and build more public housing, in order to address the city’s housing crisis.
At the same time, the government, led by Chief Executive Carrie Lam, must make new adjustments to its cooling measures—a collective of policies used to curb housing prices, mainly by imposing purchase restrictions on spectators and investors. Although it is undoubtable that these measures were initially introduced with good intentions and meant to reserve more housing supply for real home seekers, the misguided implementation of them has led some cooling measures to be ineffective and even backfire, leaving the public feeling mistreated and frustrated.
As the dream of home ownership becomes increasingly out of reach, it’s only a matter of time for public resentment to reach breaking point. There are several major issues the cooling measures have caused, among which is the definition of a “first-time home buyer”; currently, it’s defined as an individual who does not own any property. This has created a loophole that allows wealthy businesspeople who own a large amount of real estate through their companies to fit into the “first-time home buyer” category and be able to exploit the policies to obtain tax reductions. Secondly, the “first-time home buyer” status can be recycled, meaning that a home owner can sell their only property and become a “first-time home buyer” again when purchasing a new home. Naturally, that goes against what “first time” means. In addition, those who own properties can exploit the system through their relatives. There has been a case where a local celebrity asked his father, a first-time home buyer, to purchase a property and then transfer it to himself to avoid stamp duty. These are the loopholes that urgently need to be closed.
Another major issue is the restrictions on bank loans that have caused the required down payments to increase drastically for first-time home buyers. Currently, buyers can borrow up to 20% of the home value via mortgage insurance for the down payment, but it comes with a steep insurance fee. You can get a HK$1.2 million loan for the down payment when buying a HK$6 million home, but the insurance fee will be around HK$180,000—A whopping 15% of the loan itself. Moreover, the mortgage insurance is only applicable to properties valued at HK$6 million or under, indirectly contributing to the surging demand for small units. Cash-strapped young people would need to seek financial help from their parents, but families without the means to help their children to get on the property ladder are left behind, feeling angry and hopeless.
I believe that the “first-time home buyer” status should only be used once in a person’s lifetime, and if such a policy adjustment can be successfully implemented, the government shall introduce more benefits to first-time home buyers, such as complete exemption of stamp duty, zero-interest loans of up to HK$1.5 million—20% of the home price—to give them the biggest boost. Plus, if the government raises the loan-to-value ratio cap to 70% for properties priced below HK$10 million, it would incentivise homeowners looking to upgrade to bigger homes, thus releasing additional smaller units into the market.
A decade of cooling measures has yielded more unwanted side effects than actual results. More importantly, the public has found many well-intended policies to be unfair and unjust. Those with money or wealthy parents get to evade taxes or rely on their family’s riches, while the unlucky ones don’t stand a chance. Our government should own up to their failings and carry out major policy reforms if they want to appease the widespread public resentment.