The proposed Sandwich-class Housing Bill will allow flat owners to sell their units privately after a blackout period. Owners must repay the amount discounted at the first purchase to the government, based on a calculation made against the price at the time of resale.
The direction was revealed by Lawmaker Vong Hin Fai, head of the parliamentary committee considering the Sandwich-class Housing Bill.
Similar to that for Economic Housing bill, the blackout period in the Sandwich-class Housing Bill is proposed to be set at 16 years, according to the current version of the Bill.
For example, Vong cited the government as saying, if a unit is sold at MOP1 million at the first purchase, the discounted amount equates to 30% of the price. After 16 years, if the price rises to MOP2 million, the seller will need to pay 30% of MOP2 million to the government as the premium.
In contrast, if the price drops to half a million, the 30% will be counted against MOP500,000, and the premium to be paid will be MOP150,000.
The government will also task the Financial Services Bureau (DSF) with evaluating the price of the unit. If there is a discrepancy between the DSF-evaluated price and the actual selling price, the higher amount shall prevail in the calculation of the premium.
The Housing Bureau (IH) enjoys a priority purchase right at resale, as in the Economic Housing bill.
Citing the government’s explanation, Vong said that the privilege clause is included “to avoid sellers and buyers conspiring to sell the unit at a price much lower than the market price.” In this scenario, not only will the IH have the right to enjoy its priority purchase, but it will also allow the IH to make the purchase at a price calculated by deducting the discounted amount at first purchase from the price tag set by the seller.
Vong further cited the government as saying that government-purchased used apartments will be considered reserved and will be sold at a later date. For these used flats, the government will apply another 16-year blackout period. However, flats resold on the private market will not be subject to this restriction.
The head of the committee, however, did not mention whether the Bill has proposed an appeal mechanism for sellers to object to DSF’s valuation of the former’s units.
Vong said only a few committee members considered the length of the blackout period too long. The government position is that unit owners should abide with the future law “because it is built with public funds and sold at sub-market prices.”
During the blackout period, units on initial ownership must not be used for profits or used to apply for sub-mortgages. Ownership can only be changed in the case of demise of the owner.
