URA rehabilitation schemes take a booster
Four more financial institutions have joined 13 banks currently
providing mortgage loan services to owners of rehabilitated
buildings under the Urban Renewal Authority's (URA) voluntary
The mortgage loan services for rehabilitated buildings are organised by the URA in cooperation with the banking industry to encourage owners of old residential buildings to improve their homes through rehabilitation work and thus enhance the value of their properties.
Mr Stephen Lam, District Development Director of the URA announced today (Friday) that four more financial institutions, namely Citibank (Hong Kong) Limited, DBS Bank (Hong Kong) Limited, GE Money, and Industrial and Commercial Bank of China (Asia) Limited have decided to join the services. The 13 banks that have already joined in 2004 are the Bank of East Asia, HSBC, Liu Chong Hing Bank, Nanyang Commercial Bank, Standard Chartered Bank, Wing Hang Bank, Wing Lung Bank, Bank of China, Bank of Communications, CITIC Ka Wah Bank, Dah Sing Bank, Hang Seng Bank and MEVAS Bank
The arrangement is that when a building of 20 years old or above has been successfully rehabilitated under the URA's Rehabilitation Material Incentive Scheme or Interest-free Loan Scheme, the banks will be informed and will consider offering preferential mortgage terms to prospective purchasers of residential units of the building. This makes it easier for some owners who may wish to sell their units and perhaps at a better price.
Since announcement of the preferential mortgage services in August 2004, about 460 transactions were known to the URA in the 108 buildings where rehabilitation works have been completed. About 200 purchasers secured mortgage loans for their properties, of which 74% were provided by the 13 banks.
There were 42 buildings where rehabilitation works have been completed under the URA schemes when the mortgage services were first introduced. As compared with the corresponding period before then, there was an increase of about 48% in the number of transactions in these buildings.
The banks would normally revaluate the market value of the flats and offer mortgage loans up to 70% of the valuation and at an interest rate comparable to buildings of 10 years old. The repayment term will be extended to 50 or 55 years less the building age so that the mortgagors would enjoy a longer repayment period.
Moreover, the Hong Kong Mortgage Corporation has also extended its Mortgage Insurance Programme to cover buildings rehabilitated under the two URA schemes, providing a loan-to-value ratio of up to 85 per cent. This is an added incentive for owners to undertake voluntary rehabilitation for their buildings.
The URA's rehabilitation material incentive scheme and interest-free loan scheme were introduced in October 2003 and April 2004 respectively to promote voluntary building rehabilitation to alleviate the growing problem of urban decay. So far, 163 buildings consisting of about 13,700 units have joined the schemes.
Building rehabilitation is part of the URA's 4Rs strategy - Redevelopment, Rehabilitation, Revitalisation and pReservation - for a holistic approach to carry out urban renewal in the old districts.
"This is an all-win situation: the owners enjoy a better home and higher property value; the banks enjoy the prospect of a re-invigorated market of older properties; and the URA makes inroads in its mission to fight urban decay," Mr Lam said.
"Hopefully, if the Government's current proposal for mandatory building inspection would materialize, the pace of building rehabilitation will accelerate even more and the URA's rehabilitation schemes will provide assistance to many more building owners," he added.
Representatives of the 17 banks and financial institutions today visited some recently completed rehabilitation buildings in Wan Chai and Ma Tau Wai and were shown distinctive colour schemes for the facades of some rehabilitated buildings. Mr. Lam added that these colour schemes were a result of design services offered by URA to the owners with a view to brightening up their buildings and improving the built environment.