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- 2.
The first main proposal is that the life of
Part II of the Ordinance should be further extended for two
years, beyond its expiry date of 18th December 1985.
At
present, some 107,000 wholly-let domestic flats are subject to Part II controls which provides the dual protection of control on rent increases and security of tenure.
Despite a series of adjustments to the rent control
mechanism, the disparity between controlled rents and prevail-
ing market rents continues. Average controlled rents now stand at about 64% of prevailing market rent, but some two thirds of controlled tenancies are below this overall level, and about one third are still paying below 45% of prevailing
market rents. To remove completely the protection of rent
control, particularly for the low rental tenants, would be
socially disruptive and therefore quite unacceptable. It
is for this reason above all that the Government intends to
allow only a gradual return to a free rental market.
As Members will recall, so-called luxury premises have been de-controlled progressively by lowering their rateable value exclusion point over the past four years. Starting with a value of $80,000 in 1981, the exclusion point
reached $35,000 in 1984. Now, it is proposed, with effect from 19th December this year, that it should go down a little further to $30,000, the level recommended by the Committee
of Review in 1981.
Of the nearly 1,400 controlled luxury premises having rateable values of $30,000 or above to be excluded
this year, two thirds are corporate tenancies. The average controlled rent of these 1,400 premises is 83% of prevailing market rent, and as they are so close to market levels, rent control does not affect significantly the amount tenants
/have to