Authorities have raised concerns over the misuse of subsidized sale flats as subdivided rental units following revelations that owners of 14 such flats have sought a grace period to comply with new regulations. The disclosure was made during a Legislative Council housing panel meeting on October 5, when Secretary for Housing Winnie Ho Wing-yin responded to questions from lawmaker Mark Chong Ho-fung about the use of flats sold under the government-subsidized Home Ownership Scheme (HOS) as subdivided rental units.

Chong emphasized that HOS flats, considered a form of social welfare, should not be exploited for profit through subdivision. Ho clarified that leasing a subsidized sale flat without paying the required premium is illegal under the Housing Ordinance, with penalties including fines up to HK$500,000 and up to one year of imprisonment. She noted that owners who have paid the premium may seek to convert their flats into basic housing units, but this process involves technical challenges and structural constraints.

The new Basic Housing Units Ordinance, which comes into effect in March 2027, establishes minimum standards that subdivided flats must meet to be legally rented on the market. These criteria include a minimum size of 86 square feet, a ceiling height of at least 2.3 meters, a separate waterproofed toilet, operable windows, and compliance with fire safety and hygiene regulations. Existing subdivided units may apply for a three-year grace period to make necessary alterations, with registration for this period open from March 2026 through February 2027.

Ho reported that approximately 73,600 subdivided units across more than 20,000 flats have registered for the grace period, describing the applications from subsidized sale flat owners as rare, constituting just 0.07 percent of total cases. She indicated that structural modifications, such as creating windows for lighting or ventilation, are often restricted by building plans and cannot always be undertaken easily. The variations in estate design further affect the feasibility of such alterations.

Chong called on the government to clarify whether the 14 subsidized sale flats in question could be legally modified without violating their Deed of Mutual Covenant (DMC)—a key legal document that governs building management and regulations for flat owners. He also suggested that future subsidized sale flats be explicitly prohibited from being converted into basic housing units to prevent abuse of public resources.

Separately, Ho noted that authorities had received recognition applications from landlords for 184 subdivided flats, certifying 42 as compliant basic housing units so far. She indicated that applications were coming in faster than anticipated, suggesting an increasing number of landlords are seeking accreditation under the new regime. Owners must engage designated professionals to verify their properties meet all prescribed standards before certification is granted.