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the premises. The premises and the land it takes up cannot be used by
anyone else, and therefore there is no cost to society. Providing a larger
subsidy to the occupant-owners means they can then choose to sell
those units on the open market and can therefore unlock the hidden value
to be redeployed for a better use, a use that would not have been possible
or permitted if the right to sell the units were infeasible. It is therefore not
a double benefit. It is merely completing the other half of the benefit that
was not initially provided.

As thing stands, the current PRH arrangement is a great subsidy
in itself. The resource required to keep rents low among PRH tenants is
considerable, and in actuality it is a long-term subsidy for generation after
generation.

To illustrate this point, say a unit that is rented out for $20,000 per
month in the open market is rented to a PRH tenant for $3,000 per month.
The government monthly subsidy for the PRH tenants amounts to $17,000.
In 20 years’ time the accumulated subsidy, without accounting for rent
and market adjustments, will be in excess of $4 million. In other words,
subsidising the unit for 20 years is equivalent to covering the full cost of the
unit.

Table 13 shows that from 2008 to 2013, the average annual PRH
turnover rate was at 0.92%. This implies that there is effectively very little
turnover of PRH units, and by continuing to subsidise sitting tenants of PRH
it means that there is no residential mobility. The present mechanism of
a rental subsidy ad infinitum is wasteful and illogical, instead the same
amount of resources could be used through the SHS to provide a strong
incentive for occupants of public housing units to strive for bona fide
homeownership.

Table 13. PRH units’ turnover rate, 2008-09 to 2012-13

Source: Government press release.

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