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to learn from and to emulate. This might demotivate them, perpetuate
              dynamic poverty and affect their future likelihood of moving up the social
              ladder.

                     This Report believes that extending homeownership is essential to
              family investment in both human and social capital. Indeed, many studies
              have shown families who are homeowners are more likely to invest in
              childhood development and neighbourhood stability.


              5. Public Housing Policy and Social
              Justice



                     The current public housing policy is unjust because the society
              loses the value inherent in the public sector housing unit, the physical
              premises itself and the land that it occupies. The evaporation of resources
              benefits no one.


                     First, the taxpayer hardly ever collects the unpaid land premium
              because very few households ever pay it. Second, the subsidy provided by
              taxpayers to the household is the difference between the market value of
              the unit and the price the household pays for its use as shelter. Over time,
              the amount of the subsidy will increase as land values increase. It is unjust
              that the taxpayer pays for the asset value of the unit, but the household
              receives only the shelter value of the unit.


              6. The Subsidised Homeownership
              Scheme (SHS)


                     A faster, less expensive and non-wasteful solution to address
              these malign issues will be the implementation of the SHS, granting
              eligible families the option to either purchase, rent or the choice to “rent
              first, purchase later" new public housing units in the future. Also, under the
              SHS, the unpaid land premium will be considered as a “loan”, with its value
              fixed at the date of occupation, instead of effectively an “equity” under the
              existing system that fluctuates according to changes in market value of
              the unit.

                     This would render settlement of the unpaid land premium much
              easier, and a market for these units will quickly emerge. There would be an
              incentive for trading to take place and the re-matching of tenants’ needs
              and housing units would come into effect and the problem of inequity
              could be rectified.


                     Additionally, bona fide homeownership in public housing units
              would incentivise families to stay together and discourage family
              breakdown. This can therefore act as a barrier against the costs of a broken
              family among the children of the divorcees and prevent the build-up of bad
              neighbourhoods that fosters poverty and lowers social mobility.

                     Since social mobility is closely associated with homeownership,
              the SHS would relieve Hong Kong of the bourgeoning problems of income

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