1 Feb 2026
The article examines Hong Kong’s Tenants Purchase Scheme (TPS) — a policy aimed at boosting home ownership that ran into problems from economic shocks, demographic changes and fragmented ownership of ageing estates — and argues policymakers should fix structural and fiscal issues before any relaunch. It highlights trade-offs between restoring or expanding ownership, the fiscal costs of renovation/subsidies, and the need to increase subsidised housing supply.
HKDSE Topic Connections
Basic Supply & Demand
The article discusses supply shortfalls of subsidised housing and policy proposals to increase supply (new flats, GSH/HOS) and how selling rental flats affects the stock and market for housing.
Ask students to draw supply and demand diagrams for public rental and subsidised ownership flats, show effects of selling rental flats under TPS and of increasing supply via new subsidised flats, and evaluate impacts on equilibrium quantity, rents/prices, consumer surplus and waiting lists.
Private Property Rights
Fragmented ownership and mixed tenure in TPS estates create unclear property rights that reduce incentives for maintenance and complicate management, leading to disputes and under-provision of upkeep.
Pose an evaluative question requiring explanation of how clearer property rights (e.g., consolidating ownership, mandatory maintenance fund) change incentives for upkeep, and ask students to assess whether the proposed HK$50,000 maintenance contribution improves allocative efficiency and reduces free-riding.
Externalities
Mixed tenure generates negative externalities (spillover costs from neglected repairs, management disputes) that impose fiscal burdens on the government and other residents.
Require identification and classification of the externalities present, illustrate the welfare loss with a diagram, and evaluate policy instruments (subsidies for renovation, relocation incentives, compulsory maintenance funds) in correcting these externalities, including efficiency and equity trade-offs.
Opportunity cost
The government faces trade-offs in allocating limited fiscal resources (e.g., HK$150–200k renovation subsidies or ~HK$31bn estimate) between fixing legacy problems and building new subsidised units or other public spending.
Ask students to calculate and discuss opportunity costs given illustrative budget figures (cost per household vs. number of new flats possible), and write a short evaluation comparing the net benefits of relaunching TPS versus investing in new subsidised supply or maintenance.