EXECUTIVE SUMMARY

The costs of building neglect are huge at both the societal and individual levels. Situations of owners suffering escalating maintenance costs because of building dilapidation or poorly maintained buildings not being able to secure any insurance plans are highly common. There are of course even more unfortunate incidents of people losing their lives or suffering physical injuries caused by buildings in disrepair.

2. Over the years, the Government has put in substantial resources to tackle the long-standing building deterioration problem from different aspects, including enforcement against dilapidated buildings, promotional and educational activities, assisting owners in the formation and operation of owners' corporations (OCs), special schemes to support owners in building maintenance, and providing loans to owners to carry out building maintenance work. We have also solicited the support of non-governmental organizations to render various financial and technical assistance to owners in carrying out proper building management and maintenance. Our aim is to foster a building care culture slowly but surely.

3. With these concerted efforts, we are glad to see a gradual change in owners' mindset about building care. In the past, building owners' entire focus tends to centre around the maintenance of the interior of their flats. Gradually, more and more owners are paying greater attention to the maintenance of the common parts of the buildings, which directly affects the safety of both building occupants and the general public. The community have also come to realize that building owners should shoulder their responsibility in keeping their properties in good repair, not only for the sake of public safety, but also for the owners' own benefits.

4. Having taken these important strides, the Government considered it timely to engage the community to put in place long-term measures to resolve the long-standing problem of building neglect. In this connection, we conducted the first-stage public consultation on building management and maintenance in early 2004. The results of the consultation pointed to a community consensus that owners should be responsible for keeping their buildings in good repair, including shouldering the financial commitment. The community also supported the introduction of a mandatory building inspection scheme as a practicable long-term solution to arrest building deterioration. Premised on the consensus reached, we launched the second-stage public consultation in October 2005, seeking public views on the implementation details of the proposed mandatory building inspection scheme and proposed measures to enhance window safety.

PUBLIC SUPPORT FOR MANDATORY SCHEMES

5. We are grateful that the community have actively expressed their views on the relevant proposals in the consultation document. The consultation results reaffirmed that the community in general supported the introduction of mandatory building inspection and mandatory window inspection and agreed that these two schemes are instrumental to ensuring a better and safer building environment.

6. The community have put forward a lot of valuable comments on finessing the implementation details of the two mandatory schemes. Many respondents have also expressed their concerns on the need for enhanced assistance to owners in need. Without compromising the standard of building safety, we have carefully examined the views received and have taken them on board as far as possible.

7. We set out in this report our policy intention regarding the mandatory building inspection scheme and mandatory window inspection scheme. As a next step, we will commence the legislative drafting exercise to take forward the two schemes by way of legislation.

Enhancing Assistance to Owners

8. In response to public demand for greater financial and technical assistance to owners, in particular relieving those in need of the first mandatory building inspection cost, we are pleased to announce that we have solicited the agreement of the Hong Kong Housing Society (HKHS) to commit a total of $4 billion (including its earlier commitment on the Building Management and Maintenance Scheme (BMMS)) to put in place the following enhanced assistance to owners upon the launch of the two mandatory schemes (i.e. after the passage of the relevant legislation) -

(a) subsidize eligible owners, upon application by owners/OCs, on the cost of the first mandatory building inspection. The provision of such incentive to owners is meant to overcome the owners' inertia to building maintenance. The eligibility criteria will be similar to that of the HKHS's BMMS and the rateable value of the buildings will be one of the main factors in determining eligibility. The HKHS will also consider owners' individual circumstances to ensure that those in genuine need will be provided with appropriate assistance. It is estimated that about 80% of the 13,000 target buildings will enjoy the subsidy for first inspection;
(b) provide assistance to owners who have genuine difficulties in forming OCs, including, where appropriate, subsidizing the first inspection cost. The HKHS and Home Affairs Department (HAD) will also continue to assist owners in the formation of OCs or other forms of management structure to coordinate building inspection and rectification works;
(c) provide technical advice on matters relating to the appointment of building inspectors and contractors as well as the list of rectification items;
(d) offer general legal advice on the formation of OCs and matters relating to the inspection and rectification work; and

The HKHS, the Buildings Department (BD) and the HAD will continue to provide their other existing financial and technical assistance, where applicable, to eligible owners to support building and window inspection and rectification works.

Streamlining the Scheme Requirements

9. While the community supported that private buildings aged 30 years or above should be subject to mandatory building inspection and that owners should be required to inspect and repair their windows regularly, there was a substantial body of views advocating that the scheme requirements should be further streamlined to facilitate easy compliance. Without compromising the standard of building safety, we have made the following revisions to the proposed schemes -

(a) extend the cycle for mandatory building inspection from 7 years to 10 years so as to allow more time for owners to prepare for and carry out building inspection and rectification works; and
(b) adjust the age of buildings to be subject to mandatory window inspection from 5 years or above to 10 years or above and extend the inspection cycle from 3 years to 5 years, in order to minimize the burden on owners.

Stepping Up Regulation Over Service Providers

10. To respond to the community's concern over the proper monitoring of service providers, including the quality and standard of inspectors and contractors who carry out the rectification works, we propose to put in place the following -

(a) we will allow more qualified registered professionals with sufficient relevant experience to carry out building and window inspection to meet the community's demand for more service providers in the market, hence resulting in more competitive pricing. We will create a separate register under the Buildings Ordinance and establish a Registration Committee to uphold the professional standard of inspectors;
(b) BD will check all the inspection reports to ensure compliance with the requirements under the law. BD will further conduct detailed audit checks on such reports. In the first few years after the launch of the scheme, the BD will audit about 30% of the reports received;
(c) we have solicited the agreement of the professional institutes and related bodies to issue advisory fee levels on inspection and rectification works for owners' reference; and
(d) on the quality and standard of window installation, BD has issued the latest technical guidelines on window installation and design in March 2006. It will continue to review the relevant requirements. Separately, we will present the legislation on the proposed Minor Works Control System to the Legislative Council for consideration. The Minor Works Control System will improve the professional standard of the contractors responsible for window installation amongst other minor building works.

11. In summary, under the revised mandatory building inspection scheme, owners of private domestic (excluding those of 3 storeys or less), composite, and non-domestic private building aged 30 or above are proposed to be required to appoint a qualified inspector to inspect their buildings every 10 years (by reference to the date when the BD last issued the mandatory inspection notification to owners) and carry out the necessary rectification works. Details of the proposed mandatory building inspection scheme are set out in Chapter 3.

12. As regards window inspection, owners of private domestic (except those of 3 storeys or less), composite and non-domestic buildings aged 10 years or above are proposed to be required to inspect all windows, both in common areas and within private premises, fixed and openable, every 5 years (by reference to the date when BD last issued the inspection notification to owners) and carry out the necessary rectification works. Details of the proposed mandatory window inspection scheme are set out in Chapter 4.

ASSISTANCE AVAILABLE - FROM AN OWNER'S PERSPECTIVE

13. To assist owners in discharging their duties to upkeep their buildings, we have already put in place different assistance schemes since the launch of the first-stage public consultation, which have so far been well-received by the community.

14. To complement the implementation of the mandatory building inspection scheme and mandatory window inspection scheme, owners of eligible buildings will be further provided with various types of assistance at various stages to facilitate their compliance with the mandatory requirements by the Government and the HKHS -

Pre-Inspection
(a) financial incentive (up to $3,000 per OC) and technical assistance, including general legal advice if necessary, for the formation of OCs (HKHS)1;
(b) technical advice on the appointment of inspectors and contractors, including the scrutiny of tender documents (HKHS);
During Inspection/Rectification
(c) subsidy to eligible owners to cover the cost of the first mandatory building inspection (HKHS);
(d) technical guidance, and general legal advice if necessary, on matters relating to the inspection and rectification of buildings and windows (HKHS);
(e) technical advice, if necessary, on the list of rectification works specified by inspectors (HKHS);
(f) grants and/or interest-free loans for carrying out rectification works for buildings and windows (grants of up to 20% of the total cost of building maintenance works in common areas, capped at $3,000 per unit, as well as interest-free loans of up to $50,000 per unit for flat interior renovation works, including window inspection. Eligible elderly owners will also enjoy a grant of up to $10,000 per unit for flat interior renovation works) (HKHS);
(g) loans (with a ceiling of $1 million per unit) to owners under BD's Building Safety Loan Scheme for carrying out rectification works for buildings and windows (BD); and
Post-Rectification
(h) subsidy over the public liability insurance premium for common areas (up to 50% of the annual premium, capped at $6,000 per annum, for 3 consecutive years) for buildings which have completed maintenance under the HKHS' guidance and assistance (HKHS).
In addition, professional institutes and related bodies will issue advisory fee levels on inspection and rectification works for building owners' reference.

OTHER SUPPORT MEASURES

(i) Voluntary Building Classification Scheme

15. To give positive recognition to those properly maintained and well-managed buildings, the HKHS and related bodies are working on a Voluntary Building Classification Scheme (VBCS). Buildings accredited with good ratings under the VBCS are proposed to be exempted from the mandatory building inspection scheme.

16. We will ensure that the standards and requirements relating to building safety under the VBCS will be on par with, or higher than, those adopted in the proposed mandatory building inspection scheme. The assessors for the building safety part of the VBCS must be qualified inspectors under the mandatory building inspection scheme.

(ii) Dispute Resolution

17. We note that many members of the public and building owners are keen to set up a simple dispute resolution mechanism to settle building management disputes, particularly those simple cases which involve a relatively small monetary amount. Nevertheless, if one of the key features of the proposed mechanism is to dispense with legal representation in order to achieve savings in cost and time, there is a need to carefully consider whether such proposal may give rise to constitutional and human rights implications. Such a mechanism may also duplicate the roles and duties of the existing courts and tribunals, thus potentially causing unnecessary confusion to the public. We fully understand the desire to have an efficient dispute resolution mechanism in place to facilitate building management and maintenance. We will continue to study the feasibility of such a mechanism, having regard to the various implications.

18. Separately, the Judiciary is considering possible improvement measures to the extant Lands Tribunal, including the greater use of case management and the feasibility of voluntary mediation, in order to facilitate a more efficient and expeditious disposal of building management cases in the Tribunal.

WAY FORWARD

19. Backed by strong community support, we will work on the relevant draft legislation at full speed and aim to submit legislative proposals to the Legislative Council as early as possible.

20. To complement the implementation of the two proposed mandatory schemes, we will launch various publicity and educational campaigns, including collaboration with schools, in order to start inculcating a building care culture in the next generation at an early age.

21. The successful implementation of the proposed mandatory building inspection scheme and proposed mandatory window inspection scheme will represent a major step forward in ensuring a safer and more sustainable living environment, which would help to enhance Hong Kong's status as a first class international city. Better maintenance will also bring economic benefits to owners in the form of lower maintenance cost and higher property values. We are encouraged by the community's active participation in both stages of the public consultation. We will continue to count on the community's support in creating a safer building environment for all of us and for the generations to come.