The Housing Authority has endorsed the Report on the Review of Domestic Rent Policy that recommends a new rent adjustment mechanism based on changes in the household income of public rental housing tenants.

An income index tracking the movement in PRH tenants' household income will be developed to determine future rent adjustments. Implementation of the new mechanism enabling PRH rents to move both up and down in tandem with tenants' household income is contingent upon the successful passage of legislative amendments to the Housing Ordinance.

An amendment bill to replace the 10% median rent-to-income ratio, or MRIR, cap in the ordinance by the new rent-adjustment mechanism will be tabled at the Legislative Council in the first quarter of 2007.

More sustainable

The authority said the mechanism is far more sustainable than the existing statutory 10% MRIR cap under which PRH rent can only go down once the cap is exceeded.

To enable the new mechanism to operate effectively and fairly, the authority has agreed the current PRH rent should be adjusted with reference to the income index to provide a new starting point that is considered appropriate and acceptable to the community.

As the rent of the majority of existing PRH units and the "best rent" for newly completed units were last reviewed in 1997, a uniform rate of adjustment will be adopted according to the extent of changes in the income index since 1997. This would mean an across-the-board rent reduction of 11.6%.

The same rate of adjustment should also be applied to the "best rent" for newly completed PRH estates.

Rent remission

PRH tenants and Interim Housing licensees with the exception of those paying additional rent or licence fees will be granted a one-off rent remission for next February.

Since any long-term rent reduction should only be introduced after a more viable and rational rent adjustment framework has been put in place, the move can address expectations among some of the tenants for the authority to take immediate action to remit or reduce rent following the current rent policy review. The rent remission will result in revenue foregone of $963 million for the authority.

Tenants and licensees who have yet to occupy their flats for a full month will be granted rent remission on a pro-rata basis. Tenants or licensees receiving Comprehensive Social Security Assistance will have the corresponding amount, equivalent to the rent so remitted, deducted from their allowance.

To view the report, click here. Printed copies of the full report and a pamphlet summarising the recommendations will be available at all district offices and the authority's estate offices from December 6.