Housing chief Winnie Ho said officials could reward informants who alert authorities to poor quality sub-divided units (SDUs), when the flats are subject to a future regulatory regime.
The government is now collecting public views on its proposal to require each SDU to be no less than less than eight square metres in size, or 86 square feet, as well as having features like at least one window and an individual toilet.
Officials propose that landlords who violate the requirements in future could be subject to a maximum three-year jail term.
Ho said the reward system might be needed to dig out "hidden" sub-standard flats, but she stressed officials are also gauging public views over the matter.
The minister said the public has seen the proposed standards and finds them reasonable, and she described the penalty as rather heavy.
"We hope that everyone won't have to wait until informant and reward systems - that everyone agrees to follow the new rules, register the flats," she said on a TVB programme that aired on Sunday.
"We'll see how effective the new system is - and we'll see if we need to offer rewards, in addition to the regular reporting system."
Ho added that the Rating and Valuation Department has received two complaints so far from sub-divided flat tenants who said they were forced out by landlords because of the proposed regime, and officials will handle different complaints regarding rental issues.