BLOG ARTICLES FROM FORMER SECRETARY FOR DEVELOPMENT, MR MICHAEL WONG - (02/07/2017 - 26/06/2022)

The Chief Executive, Mrs Carrie LAM, delivered her maiden Policy Address recently. The Development Bureau will give all-out support to take forward the various policy initiatives to make Hong Kong an even more livable city. With an increasing number of old buildings, there are now more than 5 000 private residential and composite buildings aged 50 or above in Hong Kong. Without timely maintenance, dilapidated buildings may pose hazards to both residents and passers-by. The Policy Address proposes earmarking $3 billion for “Operation Building Bright 2.0” (“OBB 2.0”) to provide subsidy for property owners of higher risk buildings to conduct necessary inspection and repair works. We plan to launch the operation in the second half of 2018. It is expected that about 2 500 buildings will benefit from this initiative in the next five years.

The Government attaches great importance to the maintenance of old buildings. The “Operation Building Bright” (OBB) launched in 2009 has largely been completed, benefiting about 3 000 buildings. While it is the responsibility of property owners to properly maintain their buildings, some are unable to discharge their responsibility due to the lack of financial means, technical support, or an owners’ organisation in their buildings. Among these property owners, many are elderly living in “three-nil” buildings (i.e. buildings without owners’ corporation (OC), owners’ committees or property management companies). Having contributed their share to society when they were young, these senior citizens simply want to live a worry-free life in their later years. They would like to keep their savings for emergency use and the cost for building repair works would be an extra financial burden on them. After reviewing the situation, we are willing to make reasonable undertaking to assist these elderly owners to repair and maintain their self-occupied buildings.

Building rehabilitation: a matter of great urgency

The Mandatory Building Inspection Scheme (MBIS) was fully implemented on 30 June, 2012. So far, statutory notices have been issued by the Buildings Department to 3 200 residential and composite buildings, of which 1 500 are aged 50 or above, but the compliance rate of the notices is far from satisfactory. In recent months, there have been incidents associated with the safety of old buildings, including the collapse of part of the balcony of a 61-year-old building at Gillies Avenue South in Hung Hom in June of this year. Luckily, no one was injured. Nevertheless, these incidents have manifested the importance of building rehabilitation.

A Risk-based and Target-based approach

The objective of OBB 2.0 is to safeguard public safety. The operation has three main features. Firstly, it will adopt a risk-based approach to focus on private residential or composite buildings aged 50 or above which are of a relatively low rateable value. The respective caps on the annual average rateable value of the  domestic units are proposed to be $162,000 for buildings in the urban area and $124,000 for those in the New Territories. It is expected that owners of some 80 per cent of private residential or composite buildings aged 50 or above would be eligible for the initiative.

Secondly, it will take on a target-based approach. Considering the operation’s objective of safeguarding public safety, the operation will put more focus on the safety risks of old buildings. The subsidies will primarily be used for undertaking inspection and repairs works required under the MBIS, such that the condition of building structure will be improved upon completion of the works.

Thirdly, it will be caring-based. To ensure that public funds are put to appropriate use and that resources are allocated to the needy, we recommend assisting only the owner-occupiers in need to prevent property investors from free-riding. The subsidy caps will be raised substantially compared to the previous OBB, with a subsidy level of as high as 80 per cent of the total cost for inspection and repair of the common  parts of the building, subject to a cap of about $40,000 per flat. Elderly owner-occupiers aged 60 or above will be fully subsidised, with a cap of around $50,000 per flat. We also recommend providing subsidy for MBIS prescribed inspection and repair works in respect of projections in privately-owned areas of the buildings, but only at a lower subsidy level and caps compared to inspection and repair works for common parts.

As an incentive to encourage owners to comply with the requirements of MBIS on their own initiative, after paying for the MBIS prescribed inspections and repair works, eligible owners may make use of any remaining grant for other precautionary repair works in relation to the safety conditions of the buildings.

Enhancing fire safety

Apart from structural safety, enhancing fire safety of old buildings is also critical in protecting of lives and properties. The Security Bureau has proposed devoting about $2 billion to subsidise the owners’  organisations of old composite buildings to undertake fire safety improvement measures as required under the Fire Safety (Buildings) Ordinance, with a view to offering better protection for the residents.

Multi-pronged approach to combat bid-rigging in building repair works

We noted that there are concerns that OBB 2.0 may fuel the problem of bid-rigging in building repair works. The Government has all along attached great importance to the impact of bid-rigging on proper building repair. Therefore, various departments and organisations will adopt a multi-pronged approach, including stepping up enforcement actions, providing technical support to owners and launching publicity and education programmes to help owners prevent and combat illegal bid-rigging syndicates. Among others, in the days ahead, buildings joining OBB 2.0 will have to use the "Smart Tender" Building Rehabilitation Facilitating Services (Smart Tender scheme) offered by the Urban Renewal Authority (URA). Under Smart Tender scheme, the URA will provide property owners with a DIY tool-kit that offers guidance on organising building repair and maintenance works; arrange for them independent professionals to provide technical advice and market estimates on the cost of works such that owners may obtain sufficient information for the tendering of repair and maintenance works, as well as making available an electronic tendering platform, so that property owners may organise repair and maintenance works and engage contractors free from interference, thereby reducing the risk of bid-rigging. With  an earlier Government grant of $300 million, eligible owners’  organisations can now participate in the Smart Tender scheme at a concessionary rate.

I entirely agree with the Chief Executive in what she has said in the Policy Address that for Hong Kong people to be happy, hopeful, confident about the future and have a sense of belonging, a vital prerequisite is that Hong Kong is a liveable place. The Development Bureau is willing to undertake this mission to make Hong Kong an even more liveable place: in addition to actively identifying land for housing development and public facilities, promoting urban development and improving building safety, we will work in partnership with the Harbourfront Commission to encourage the community to make better use of the resources in the harbourfront and facilitate the public to enjoy the harbourfront environment as much as possible. Meanwhile, we are seriously considering relaunching the policy to revitalise industrial buildings, as well as expanding the terms of reference of the Energizing Kowloon East Office to extend the momentum of urban transformation to San Po Kong. We hope to work hand-in-hand with the public and various sectors of our community to build a Hong Kong that we take pride in, a beautiful Hong Kong that is caring, inclusive and also a place good for both living and work.