Residents of a privately-owned low-cost rental housing estate in Shek Kip Mei have been asked to move out of their flats by March next year, with at least 670 households eligible to move back after the site is redeveloped.

The Hong Kong Settlers Housing Corporation, which manages the decades-old Tai Hang Sai Estate, announced on Friday that after reviewing the information provided by 1,012 households, around two-thirds of them will be eligible or partially eligible to move back.

The tenants can choose to arrange for temporary housing themselves, or apply for transitional flats with the help of the area's social work service team.

A single-person household hoping to move back after the redevelopment will get HK$540,000 in rent subsidies and another HK$30,000 for relocation.

A family of four, on the other hand, will receive a total of HK$864,000 in financial assistance.

Meanwhile, eligible households that decide not to move back will receive a one-off grant, which is around 25 percent more than that of returning tenants.

The corporation added that around 320 households have been deemed ineligible to move back, mainly because they or their family members already own property or are living in government-subsidised flats.

Each ineligible individual, however, will still receive a HK$100,000 subsidy, with the amount capped at HK$700,000 per household.

Tenants are given two months to make a final decision, and have to move out of their flats by March.

Lawmaker Priscilla Leung from the district-based Kowloon West New Dynamic called the compensation arrangement reasonable.

"The compensation and the lump sum money, I personally hold the view that it's quite reasonable for a temporary period, and also for the common good of the area, especially that area is one of the busiest, most [populated] area in Sham Shui Po," she said.

Elderly residents of the estate, however, told RTHK that they are worried about having to find somewhere else to rent.

"We are old and we need to convince the landlord that we can afford the rent," an 83-year-old man said.

The redevelopment project is estimated to be completed in 2029. It can provide more than 3,300 units, and the rent level is expected to be similar to that of public housing.