Deep Dive delves into hot issues in Hong Kong and mainland China. Our easy-to-understand articles provide context to grasp what’s happening, while our questions help you craft informed responses. Check sample answers at the end of the page.
News: URA’s financial burden
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Experts call on the Urban Renewal Authority to review its existing compensation scheme
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The government body has recorded a budget deficit for three consecutive years
Beatrice Mok, whose name has been changed at her request, and her husband have mixed feelings about moving out of their old tenement building. The couple, both in their sixties, have lived in To Kwa Wan for around four decades.
It has been difficult to say goodbye to the quiet waterfront neighbourhood in Kowloon that is part of the “five streets” scheme. But walking up the stairs in their eight-storey building and dealing with falling concrete and water leaks in their flat has been exhausting for them.
Mok said it was a relief when the Urban Renewal Authority (URA) announced plans in 2022 to redevelop the neighbourhood. The area is old, with dozens of residential buildings from the 1960s and two industrial blocks built around 1980 on the opposite side.
Now, three years later, the couple are set to receive around HK$6.5 million for their 470 sq ft flat. The amount is equivalent to the market price of a comparable
seven-year-old home in the district. They intend to use the money for travel and to rent a flat as their new home.
“We are getting older, and our health is declining … We rely on our savings for a living. With cash in hand, our days will be easier,” Mok said.
After receiving compensation, owner-occupiers can also choose the flat-for-flat scheme.
But only 67 owner-occupiers, or 2 per cent of those receiving compensation, have bought replacement homes in the past 14 years.
Mok and her husband are likely to be among the last batches of owner-occupiers receiving compensation under the “seven-year rule”. The cash-strapped URA is reviewing such payouts, deeming them “very generous” compared with the market value of old buildings.
The Planning Department has predicted that more extensive long-term redevelopment efforts would be required. It expects to handle an average of nearly 14,000 private flats per year from 2031 to 2048, compared with only 4,000 per year from 2021 to 2030.
Over the past five years, the URA has spent HK$30 billion to acquire old buildings for redevelopment projects, with 45 per cent, or HK$13.5 billion, of that paid to residential owner-occupiers. The government body expects to spend another HK$23.5 billion on its six ongoing projects in the next few years.
The URA has warned that the more it acquires, the more it loses. It has recorded a budget deficit for three consecutive years, with the latest at HK$2.7 billion in the last financial year.
This has pushed urban renewal experts to call on the authorities to review the URA’s acquisition and redevelopment policy as well as other schemes.
Staff writers
Question prompts
1. Which of the following is false, according to the information in the news?
(1) The more old flats the URA acquires, the more it loses money.
(2) Beatrice Mok and her husband did not receive compensation from the URA.
(3) Some experts believe that the URA’s existing policies need to be amended.
(4) The only compensation for owner-occupiers is getting a flat at the redeveloped site.
A. (1), (2) only
B. (2), (3) only
C. (2), (4) only
D. (1), (4) only
2. List ONE reason experts are calling for a review of the URA’s acquisition and redevelopment policy.
3. In Beatrice Mok’s case, do you think the compensation is “too generous”? Explain using the news, glossary and your own knowledge.
Illustration
Question prompts
1. Describe what you see in this illustration and explain how it relates to the news.
2. How likely is it that the URA will continue to have financial issues? Explain your opinion using the news, glossary and your own knowledge.
Glossary
“five streets” scheme: the planning and redevelopment project involving Ming Lun Street, Chung Sun Street, Hing Yin Street, Hing Yan Street and Ma Tau Kok Road in To Kwa Wan. It affected about 930 property interests, 1,410 households and 90 industrial building users.
flat-for-flat scheme: a compensation alternative that allows owner-occupiers to buy a home on the lower floors of the redeveloped site or in designated URA projects
seven-year rule: a compensation policy where owner-occupiers affected by the Urban Renewal Authority’s projects receive a cash payout equivalent to the market price of a comparable seven-year-old flat in the same district
budget deficit: when spending costs are more than the amount coming in. The current compensation scheme heavily relies on soaring property prices to profit and operate. This formula no longer works. In the past, when the property market thrived, flats in redeveloped projects could be sold at a price higher than their acquisition cost.
Sample answers
News
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C
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Experts are calling for a review of the URA’s acquisition and redevelopment policy because the URA has been recording financial losses, and many believe its “high” and “unsustainable” compensation payouts are to blame.
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The compensation Beatrice Mok receives could be seen as “too generous” because under the seven-year rule, she gets a payout equal to the price of a much newer flat, even though her building is very old. This generous policy has resulted in high costs and deficits for the URA, prompting calls for a review. However, it also helps elderly owners like her secure better living conditions, so some might see it as adequate support. (accept all reasonable answers)
Illustration
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The illustration shows a worried-looking man wearing a “URA” badge, holding large bags of money labelled “compensation” over old buildings. Above them, the word “deficit” looms like a dark cloud. This represents the Urban Renewal Authority (URA) spending heavily on compensation for redevelopment projects, leading to significant financial losses and budget deficits.
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It is quite likely that the URA’s financial problems will continue. The URA has already suffered budget deficits for three years, and it still plans to spend billions more on ongoing projects. The generous “seven-year rule” means high payouts to owners, which the URA calls unsustainable. Unless the policy is reviewed or government support increases, the URA’s financial challenges are expected to persist. (accept all reasonable answers)
