113
32. What, then, is the remedy? It is obviously of no advantage to the community for the Government simply to give away land cheap to applicants unless some conditions are imposed in return by the Government for the benefit of the community, because that would simply amount to giving a present to the applicant; and would not even enure for the benefit of the tenant, because the former would naturally charge the tenant as much as he could get out of him according to the conditions of supply and demand pre- vailing at the time. We therefore recommend that (apart from special cases such as the free grant of land for erecting some deserving institution, or a cheap grant of land for the sole purpose of occupation by employees or cases. under paragraphs.45 and 46) the Government do not sell land without auction below its market value, except subject to the following special conditions which are intended to serve the double purpose of preventing speculation in land, and protecting the pocket of the tenant. See also para. 35.
33. The conditions which we recommend should be inserted in the conditions of sale of all land sold without auction (apart from the special cases above referred to) are as follows:-
(1) That, to prevent speculation in building sites, the purchaser of the
lot must covenant to perform the building covenant himself. (2) That failure to carry out punctually such convenant shall in every case, except where a good excuse is shown to the satisfaction of the Governor in Council, involve forfeiture of the land, and re-entry thereon by the Government, without payment of compensation.
(3) That such original purchaser shall have no power to resell or alienate in any way until after the expiration of 7 years from the date when the buildings to be erected on the lot have been com- pleted and certified fit for occupation.
(4) That the rental to be charged by the original purchaser of the land to the tenant shall not be greater than will return to such purchaser a net 8% on his capital outlay.
Under these conditions of sale, an investor in land receives 8% interest for his money with the prospect, if the Colony continues to expand, of making, a profit at the end of the above term of 7 years; whilst, at the same time, the tenant is protected for the same period from having to pay more than a certain standard of rent.
34. We consider the above conditions (3) and (4) to be vital, because, if the Government permits new houses to be built on cheap land, without restrictions both as to alienation and as to rental, we shall in reality (be catering largely for the refugees who can afford to pay high rents, and shall he working against the interests of those classes who obviously require cheap houses, namely, the British, Portuguese and Chinese residents of limited means, and the Chinese working classes.
* 35. Accordingly, we think that (apart from the special cases men- tioned in paragraphs 24, 26, 36, 45, 46, 96 and 124) the Government has no right to grant land either free or cheap without receiving a definite compen- sating advantage in the shape of a covenant against resale within a certain period, and a limitation of the rent to be charged.
* 36. There is another scheme for encouraging the building of more dwelling-houses on new sites, namely, the scheme outlined by the Honourable Acting Colonial Secretary in the Legislative Council. This scheme has attractions for people with speculative instincts. Though it is to be free from the above condition 3 in paragraph 33 supra, and, as soon as the property is sold, from condition 4, it is useful from the point of view of encouraging the erection of more houses on new sites, on the snowball' principle. Subject, therefore, to the application to it of the above-mentioned conditions 1 and 2, and to the premia being fixed at market value, we think that the scheme may be tried simultaneously with that recommended by us in paragraphs 31 to 34,
Conditions for selling land cheap without
auction.
Conditions (3) and (4) vital.
Government only to grant land free or cheap against compensating advantage.
Mr. Fletcher's scheme for encouraging building.