Better Mortgage Loan Terms for Rehabilitated Buildings

Six more banks have joined a scheme initiated by the Urban Renewal Authority (URA) to provide better mortgage services to owners of rehabilitated residential old buildings, bringing the participating banks to a total of 13.

The mortgage loan scheme for rehabilitated building, which aims at improving the liquidity potential of aged properties in the old districts, is a new move by the URA in its continuing drive to encourage owners of old buildings to rehabilitate their properties.

A spokesman of the URA announced today (Wednesday) that six more banks, namely Bank of China, Bank of Communications, CITIC Ka Wah Bank, Dah Sing Bank, Hang Seng Bank and MEVAS Bank have decided to join the scheme.

Seven banks that have already joined the scheme are the Bank of East Asia, HSBC, Liu Chong Hing Bank, Nanyang Commercial Bank, Standard Chartered Bank, Wing Hang Bank and Wing Lung Bank.

Under the scheme, the banks will offer preferential mortgage terms for residential units in buildings that have been rehabilitated with the assistance of the URA. The banks will offer mortgage loans up to 70% of the property value at an interest rate of Prime less 2% or better for buildings under the rehabilitation programme of the URA. More importantly, the repayment term will be extended to 50 or 55 years less the building age, allowing the borrowers to enjoy a longer repayment period.

The spokesman said that in the past banks have tended to be very tight about home mortgage for buildings in the old districts because of the risk caused by a general lack of building maintenance and repair. "They now have more confidence in lending after the URA has shown them the results of a number of rehabilitated tenement blocks in Tai Kok Tsui and Mong Kok," the spokesman said.

The URA introduced a five-year programme in May this year with a total budget of $210 million to assist owners in carrying out rehabilitation work voluntarily to improve their buildings. The programme aims at rendering assistance to owners of some 32,400 units in 540 buildings to carry out rehabilitation works.

So far, about 50 buildings have already joined the rehabilitation programme, involving nearly 6,000 residential units.

As a further marketing effort, the URA is also recruiting the help of hundreds of real estate agents operating in the old districts. A series of marketing briefings is being held to help the agents look at the old buildings market in a fresh light.

"The estate agents are generally impressed by the quality of the buildings after rehabilitation. They are also very happy to hear about the positive attitude of the banks which they think is a shot in the arm to bring this long neglected segment of the property market back to life," the spokesman said.