The government on Monday rejected a suggestion to waive the planned public housing rental hike for two years, citing factors such as the financial health of the Housing Authority (HA).

The authority will decide next week whether to go ahead with a proposal to increase rent by 1.17 percent from October, with the extra amount waived for a year.

But speaking at a Legco housing panel meeting, the DAB's Chan Hok-fung and Connie Lam from Professional Power said the waiver should be extended for two years until 2024.

They said the planned increase will be too much of a burden for tenants as the grassroots community had been hit hard by the economic downturn triggered by the Covid pandemic.

However, housing chief Winnie Ho stressed officials must consider factors besides affordability, including the financial health of the Housing Authority.

"For this [rent adjustment] exercise, we considered the rate of increase of rent, and the circumstances of our society. We believe the total waiver of HK$262 million is appropriate, or else the HA's finances would be put on a strain," she said.

The director of housing, Agnes Wong, added that the authority's rental housing operating account is expected to run into a deficit of nearly HK$600 million in the next financial year.

She said there are currently already measures to help tenants with financial difficulties, such as the waiving of rates and a rental subsidy scheme.