The Housing Authority today released a consultation paper on domestic rent policy. It proposes to introduce a mechanism to guide public rental housing lease adjustments based on movements in consumer price or tenants' household income.

Authority chairman Michael Suen said the review will establish a rent structure that is more rational and flexible, providing greater choice to tenants and promoting the long-term sustainability of the public housing programme.

The paper sets out the initial findings of an ad-hoc committee, and one of the most important reform proposals is to establish a more transparent and well-defined index-linked adjustment mechanism.

The committee identified four rent adjustment reference indexes based on movements in consumer price or tenants' household income. They are:

* Consumer Price Index (A) (CPI (A));

* CPI (A) excluding housing expenditure;

* Median Monthly Household Income; and,

* Average Monthly Income Index.

The paper also proposed the following three possible options to improve the methodology for assessing the median rent-to-income ratio:

* collecting more reliable income data by way of a declaration system;

* excluding Comprehensive Social Security Assistance recipients and tenants paying additional rents from the calculation of the ratio; and,

* compiling the ratio based on net rents, i.e. excluding rates and management expenses.

On the possible introduction of a system of differential rents based on floor levels, orientation and external views of the flats, the committee said it can better reflect the rental values of different units, enhance fairness and provide greater choice to tenants.

Exclusive rents

The committee said the authority should consider moving towards charging net rents exclusive of rates and management fees in the longer term.

However, having considered the operational difficulties of introducing exclusive rents and potential inconvenience to tenants, the committee believes that a more practical alternative would be to continue to charge inclusive rents but separately set out the amount of rates and management fees in an annual statement to be issued to individual tenants to enhance transparency.

The consultation paper also examines a host of other key issues. They include:

* alternative methods for measuring tenants' affordability;

* the feasibility of practising fixed-term tenancy; and,

* a rent review cycle.

Committee chairman Ng Shui-lai said tenant's affordability and the long-term sustainability of the public rental housing programme are the two guiding principles of the review.

"We will keep an open mind and take into full account the views of the community before drawing up our recommendations to the authority," he said.

Public forums

During the three-month consultation, all 18 District Councils will be consulted. Four district public forums and two meeting-the-public sessions will also be organised to solicit public views.

For consultation paper details click here. Views should be sent to the Housing Department's Committees' Section, 10/F, Block 2, Housing Authority Headquarters, 33 Fat Kwong Street, Kowloon, by fax on 2761 5770 or by email to cdrp@housingauthority.gov.hk on or before June 9.