CONFIDENTIAL
10 -
Rate Increases
16.
It must be recognised that rate increases for the Urban Council will not be well received by the public and it
is to be hoped that the Urban Council's growing requirement for funds will largely be met from the expansion of the rate yield rather than from increases in its rate, The percentage charge for rates has remained unchanged since 1931, the expansion in rate revenue since then being due to a steady growth in the amount of rateable property and to frequent revaluations. Where an inclusive rent is paid, any increase in the percentage charge should be passed on to tenants in the form of higher rents; but in practice the Landlord & Tenant Ordinance, as well as the 1970 legislation controlling rentals in most postwar properties, do not permit landlords to pass on rate increases to their tenants and amending legislation would be necessary to this end. However, the increases for each property are not likely to be substantial; e.g. for a typical prewar building assessed at a rateable value of $3,200 an increase in the percentage charge from 17% to 20%, (a substantial 3% rise, which might yield an extra $60 million in 1972/73) could result in monthly rent increase of about $4 for the ground floor and $1 for each upper floor. For postwar property, taking a typical large tenement floor with a rateable value of about $3,000, a similar rate increase would increase the rate payable by about jʊ a
month.
The public has been repeatedly warned that the rate percentage might be varied, and landlords have been publicly warned of the possible consequences for them of letting at inclusive rents. The difficulties that will arise as regards passing on increased rate charges to tenants cannot be accepted as adequate grounds for not proceeding with this scheme, and it
at any must be accepted that the Urban Council will be free, time, as soon as the scheme is put into operation, to seek an increase in its rate. It would be for the Legislative Council to decide whether or not to allow an increase in the Urban Council rate, but it would seem reasonable for such applications not to be disallowed unless there were pressing reasons of public interest.
}
CONFIDENTIAL
/Controls