Rent ruling could cost Hong Kong housing authority millions of dollars

HONG KONG, July 11 (AFP) - Hong Kong's Housing Authority was on Friday found in breach of the law by failing to lower public housing rents for some 660,000 households, in a ruling that could cost the authority 1.4 billion Hong Kong dollars (180 million US) in returned payments.

The Court of First Instance ruled that the Housing Authority, which has frozen rents for several years, had a duty to adjust rents as household incomes fall.

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The landmark ruling resulted from a case brought by two public housing tenants against the authority, challenging its interpretation of rent reviews.

Lawyers for the tenants argued that the rent they had paid exceeded the legal ceiling of 10 percent of the median household income.

The Housing Authority argued it only had to comply with the law if it wanted to increase rents, local radio reported.

But in a written judgment, the court ruled the authority had a duty to adjust rents in line with inflation or deflation.

Secretary for Housing, Planning and Lands Michael Suen told reporters the authority was very disappointed with the decision.

"It is a very important decision which will affect our policy in our determination of rates and will have an impact on the financial situation of the Housing Authority," said Suen.

He said the authority would need to study details of the judgment and seek legal advice on what step to take next.

Suen declined to confirm whether the authority would be returning the extra rent already paid or appealing the decision.

The Housing Authority has frozen rents for several years. However, the median household income in the territory has fallen.

The law setting out the rent ceiling was passed in the final days of British colonial rule which ended when Hong Kong reverted to Chinese sovereignty in 1997.

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