The hostel is one of 78 private care homes in the city. Like the 200-plus homes subsidised by the government or run by non-governmental organisations, each hostel must obtain a licence to certify its safety and service standards, or a temporary exemption to give it time to bring facilities up to scratch.

The hostels typically offer meals, routine personal care, activities and exercise equipment. They fill a gap in the market at a time when the waiting list for government-subsidised hostels stretches to 10 years or more.

A licensing regime kicks in on June 10, yet, as of the start of this month, only eight private homes had licences. A further 46 were granted exemptions, typically of 12 to 18 months. The home the 52-year-old and her mother live in is among those granted an exemption, with the owner given time to clear up zoning issues and improve buildings.

More licences and exemptions are expected to be granted as the Social Welfare Department rushes to scrutinise applications. But eight private hostels, home to more than 50 people, will close as their owners have applied for neither an exemption nor a licence. And more could go when their temporary extensions expire as owners struggle to find the funds for improvements.

The licences - under which homes must provide at least 6.5 square metres of living space per resident and improve fire safety - started in November 2011, but operators had an 18-month grace period to apply.

"At least one-third [of the private homes] might close down [when their temporary exemptions expire]. It is a very conservative estimate," said Joe Li Wing-yiu, chairman of the Private Hostel for Rehabilitation Association. "Small hostels already find it hard to survive."

The operator of one home said he would have to close his private hostel in the New Territories after his exemption period ends, leaving about 30 residents to be relocated. With money running short, he would be unable to meet building and land-zoning requirements.

"The top officials are too superficial and failed to have a thorough consideration" of the new rules, the operator said. "Allowing the disadvantaged to stay could be a win-win situation as their wait for [subsidised] hostels generally takes a long time."

Some social workers said it was a pity, as the closure of his care home would leave those in need of cheap accommodation with fewer choices.

He charges each resident about HK$2,000 a month - about half the market rate for private hostels. Some 70 per cent of residents live on welfare.

But his two rented bungalows were converted from agricultural facilities and are on land designated for agricultural use, where the operation of a social welfare facility is not allowed.

"I was told by government officers that my premises will not comply with the building requirements as imposed," the hostel owner said.

"I looked for many New Territories sites for relocation to prevent closure. But many landlords declined to lease for care-home use and grant a long lease of two years" as required for applications for subsidies, he said. He said he would struggle to afford the renovations to meet safety, design and building standards.

Stephen Sui Wai-keung, commissioner for rehabilitation at the Labour and Welfare Bureau, told lawmakers last week that as far as the bureau knew, hostel operators who had yet to apply for licences or exemptions had made plans to move residents to other private homes.

The Social Welfare Department will use cash from the Lotteries Fund to subsidise improvement works at hostels to the tune of up to 60 per cent. The government said it introduced licensing in part because the quality of service at homes was "not always satisfactory" and "has been a subject of public concern".

Lawmaker Dr Fernando Cheung Chiu-hung fuelled public concern in 2006 when he and a concern group said some residents of private hostels were tied up for long periods, lived in unhygienic conditions, were given unhealthy food and suffered skin diseases due to a lack of care.

Media reports showed residents tied to beds and chairs, while hostel staff said restraints were needed as residents posed a risk to themselves and others.

Cheung said last week that the market for private hostels arose "because the government shuns responsibility for providing hostel care for the disabled".

"We don't oppose private hostels, as they should have room to do business. But many hostels overseas are for those who want to have higher-quality service and a better environment. They are high-class. But Hong Kong's private hostels are of the lowest class. Why do people have to choose them? It is because they have no other choice. The wait for subvented [subsidised] homes may take 10 years."

He urged the government to closely monitor people moving out of private hostels.

"Those living there, I believe, are the most helpless and face the toughest situation ... most likely, their relatives may not even be able to take good care of them."

The government plans to provide 522 subsidised hostel places this financial year and 31 the following year.

Director of Social Welfare Patrick Nip Tak-kuen told lawmakers this month that the Social Welfare Department would identify vacant public flats for conversion into hostels. It would also book places in good-quality private accommodation for disabled people. In the long term, Nip said, the government would use suitable vacant premises at its facilities and schools for rehabilitation services.

Despite those efforts, 7,800 are still waiting for a government-supported hostel place.