Policy Address

Devise a System on the Renting of Subdivided Units in Residential Buildings to Tackle the Issue

161. The Task Force on Tackling the Issue of SDUs has already submitted a report. The Government has decided to put in place, through legislation, a system on the renting of SDUs in residential buildings. SDUs meeting the required standards will be named as Basic Housing Units.

162. Current SDUs differ significantly in their conditions regarding fire safety, ventilation, floor area, availability of individual kitchens and toilets and whether they are separated or combined, among others. As such, it is necessary to set minimum standards to eradicate inadequate SDUs. At present, there are some 110 000 households living in SDUs, indicating a genuine demand for these units. As the aggregate rent received from several units subdivided from a single flat is much higher than the rent of one whole flat without subdivision, it gives owners a strong financial incentive to operate rental SDUs. Under appropriate regulation, the market demand for SDUs will be satisfied by Basic Housing Units that meet the required standards.

163. Substandard SDUs in residential buildings must be converted into Basic Housing Units that meet the required standards. Upon conversion, these units must be confirmed by professionals their compliance with the required standards and apply for recognition. Otherwise, there would be criminal liability on the part of owners to rent out substandard SDUs, while the tenants concerned will not be held liable. We will allow time for owners of existing SDUs in residential buildings to carry out the necessary works. A grace period will be prescribed by law, during which enforcement actions will not be taken against the illegal renting of substandard SDUs. To this end, the Government will set up a registration system, enabling registered owners to be entitled to the grace period. The registration system only accepts applications from owners of pre-existing SDUs in residential buildings under rental. New SDUs entering the market must apply for recognition as up-to-standard Basic Housing Units before renting out, hence no grace period is needed for their conversion. Given that only new SDUs recognised as up-to-standard Basic Housing Units are allowed to be rented out, and that pre-existing registered SDUs must be converted into Basic Housing Units in conformity with the required standards or they will face orderly eradication if the owners concerned continue to rent out substandard SDUs illegally after the grace period, the number of substandard SDUs in residential buildings will gradually go down to zero.