C.S. 166
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XCC(77)38
Copy No. 33
Page 2 of 4
of 80
recurrent costs; the rents have never been increased, and do not cover today's running costs. No account was taken of comparable rents in the private sector, and the current rents are only a small fraction of market rents.
5
Since the formation of the new Housing Authority in 1973, a different concept has prevailed. Flatted factories are seen as commer- cial undertakings to be let at market rentals which should provide a surplus to help in the achievement of the Authority's main task, which is the provision of low rent domestic accommodation. Tenants of factory blocks are in a purely commercial relationship with the Authority and there is no reason why the Authority's funds should be used for their profit making ventures. Thus, for two blocks of similar design completed in 1975 in Kowloon Bay, the exclusive rents were fixed at 54 cents to $1 per square foot depending on the floor. This represented 80% of the then market rentals, as estimated by the Commissioner of Rating and Valuation.
6
The acceptability of these new rental arrangements is shown by the fact that, since the opening of the Kowloon Bay factories in 1975, over 80% of eligible squatter operators have opted to sign leases and take tenancies on the new terms, and only 20% have taken the cash alternative. As small units below 1, 550 square feet for small-scale workshops are not available in the private sector and because of the popularity of these units, the Housing Authority has recently decided to proceed with a programme of building more small factory units to be let at full market rents.
7
The difference between the rents at paragraphs 4 and 5 above is highlighted by a comparison between the rents of units of the same design at Kowloon Bay and Kwun Tong Estates a few hundred yards apart. Whereas in Kowloon Bay the rents vary from 54 cents - $1.00 per square foot depending on the floor; in Kwun Tong rents are about half, varying from 25 cents - 55 cents a square foot for practically identical accommodation. There is no substantial difference in the scale and type of business being carried out in the two estates.
Present proposals
8
The Housing Authority's budget shows an expenditure of $10.5 million on management and maintenance alone, excluding any finance charges; and a rent income of $8.7 million, i. e. a loss of $1.8 million on recurrent expenditure alone. Since it is not Government's policy to
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