A view of residential buildings in West Kowloon District, Hong Kong on April 11, 2023. (ANDY CHONG / CHINA DAILY)

A group of Legislative Council members – dubbed “G19” –have suggested relaxing the mortgage default guarantee period for Home Ownership Scheme (HOS) flats under the Secondary Market Scheme.

They recommended extending the current 30-year mortgage payment guarantee period provided by the Housing Authority for HOS flats to a 60years with the aim of revitalizing the secondary market of over 300,000 HOS flats in Hong Kong.

"G19" is a collaborative platform formed by 18 Legislative Council members, including nine functional constituency lawmakers and nine Election Committee constituency lawmakers.

The White Form Secondary Market Scheme from the Housing Authority’s allows potential buyers who meet the asset requirements but have no public housing units to hand over to purchase HOS flats without paying a land premium

“The current 30-year mortgage default guarantee period has directly affected buyers applying for the mortgage period and the ratio related to the White Form Secondary Market Scheme. If the age of the desired HOS flat has reached or exceeded 20, or even 30 years, it is almost impossible for the bank to approve a reasonable mortgage term (such as 20 years or more) to potential HOS flat buyers, which seriously affects the second-hand transaction of HOS flats,” G19 member Chow Man-kong said in the Friday press conference. 

Chow, who is a LegCo member from the Election Committee constituency, said about 90 percent of HOS flats in Hong Kong are 20 years old or more. 

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The White Form Secondary Market Scheme from the Housing Authority’s allows potential buyers who meet the asset requirements but have no public housing units to hand over to purchase HOS flats without paying a land premium.

Tony Tse Wai-chuen, who is the G19 Convener and represents the architectural, surveying, planning and landscape constituency, added: “As the current building technology is becoming more and more mature, when extending the payment period to 60 years, there should be no major risk from the perspective of building safety.”

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Chan Chun-ying, who represents the finance constituency, said, “The extension of the mortgage default period will not affect the healthy development of Hong Kong's public finances. On the contrary, maintaining the current practice that locks up the circulation of second-hand subsidized flats and public housing will only increase the HKSAR government's burden of building public flats and subsidized housing.” 

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Chan Kin-po, who represents the insurance constituency, stressed that the relaxation would allow more young people to obtain a longer mortgage term from the bank for homeownership. 

“Due to the increase in transactions in the secondary HOS market, the stamp duty on related transactions will also increase, and it is also expected to promote the growth of bank mortgage business,” Chan noted.

Chen Yuting contributed to this story