Setting rent with reference to tenants' affordability: Public housing rent policy in Hong Kong

Hong Kong is one of the housing systems in which public tenants' affordability has been incorporated in the rent-setting mechanism in which the median rent-to-income measurement is employed as an explicit indicator of affordability. However, contravening policies in the public housing sector make such a simple rent-setting formula complicated. A more detailed analysis of the rent-setting mechanism also reveals that the arbitrarily picked up reference ratio is incapable of catering for the wide variety of circumstances among tenants. At the same time, there is also some inconsistency in adopting a unified affordability standard in different aspects of rent setting. Lastly, the endorsement of affordability as an overarching principle in rent setting is prone to introduce contradictions in the system. The level of rent may bear a close relation to the circumstances of the occupants but not to the conditions of the dwelling. Affordability as a market-oriented principle would also weaken the legitimacy of the public rental sector as a basically supply-side oriented regime.