The Housing, Planning & Lands Bureau proposes amending the Housing Ordinance to introduce a new income-based rent adjustment mechanism for public rental flats.

The bill will be gazetted January 19 and tabled at the Legislative Council for first and second reading on January 31.

It seeks to replace the statutory 10% median rent-to-income ratio cap with an adjustment framework that provides for both upward and downward adjustments according to changes in tenants' income.

It empowers the Housing Authority to compile an income index to track the movement in public rental housing tenants' household income and requires the authority to vary rent according to the rate of the increase or decrease of the income index, unless the amount of the variation is considered by the authority to be insignificant.

It also requires the authority review public rental housing rent every two years and not vary the rent within two years after the start of the amendment ordinance or after the preceding rent variation.

To provide an appropriate starting point for the proposed income-based rent adjustment mechanism to operate effectively, the authority has agreed to adjust rent according to the extent of changes in the income index since 1997, i.e. an across-the-board rent reduction of 11.6% upon the passage of the bill.