The Home Ownership Scheme administered by the Housing Authority is intended to provide qualified families and public housing tenants with preferentially priced residential units. Generally speaking, in the assignment from the Housing Authority to the purchasers of HOS flats, there is a restriction on alienation to prevent abuse of the Scheme. Letting HOS flats is generally prohibited.
Mr and Mrs Ho bought an HOS flat from the Housing Authority years before and had lived in it until recently. The mortgage was paid up last year. As the couple's income had stabilized over the years and seeing that the price of flats had come down considerably, Mr and Mrs Ho decided to buy a residential unit in the private sector. They found a suitable one and the family soon moved into the new flat. In the meantime, they tried to have their HOS flat listed for sale, but there had been no inquiries. After a while, Mr Ho planned to let the unit so that it would not be left vacant, and the rent received could also help them to pay for the new flat. Mr Ho was aware that premium had to be paid before selling an HOS flat, but he did not realize that the same would apply to letting.
With the assistance of an estate agent, Mr Lau, the prospective tenant signed a lease with Mr Ho for the tenancy of his flat, and paid the rent and deposit. A few months later, Mr Lau learned that the premium had not been paid in respect of the flat he was renting. In order to avoid trouble, Mr Lau asked for the cancellation of the lease and the refund of the deposit and rent. Mr Ho would not listen at first, but, after consulting legal opinion, realized that unauthorized sale or letting of HOS flats would contravene the Housing Ordinance (Cap. 283 of the Laws of Hong Kong). He also found out that any agreement purporting to sell or let such flats would be void. He finally agreed to cancel the lease.
Mr Ho, in letting an HOS flat without having paid the premium and without obtaining a Certificate of Discharge of Restriction on Alienation, violated the provisions of the Housing Ordinance and could have been prosecuted.
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