66. The rent which would have to depend on a number of varying factors.
(a) Cost of development i.e.
and buildings.
(b) Rate of interest required.
(c) Type of ownership.
277
be charged for a given type of house will They are
cost of land, site formation, roads, sewers
(d) Situation of property and neighbouring development.
67. In England the costs of roads and sewers are charged as a separate item to property owners, but in Hong Kong they are included in the sale price of the land. The average for land, roads and sewers for London Housing estates up to 1934 was £38 per house at an average density of less than 12 houses per acre. Propor- tionately at 15 houses per acre the cost would be £30, which, at current rate of exchange, would be $480 in Hong Kong. In Hong Kong, in Shamshuipo and similar districts, the upset price of Crown Land is $1.50 per sq. ft. or $1,450 per house; this includes the provision of roads and sewers. Land charges are therefore about three times higher than those on the outskirts of London, where the price of land is notoriously high.
68. Some time ago it was proposed to develop Kowloon Tsai as a European residential suburb and, after allowing for all development costs, it was estimated that, with the exception of a very small area reserved for shops, building land could be sold at a handsome profit at 40 cents per square foot. It was proposed to charge $1.00 per square foot for land in the shopping area. In its original state Kowloon Tsai was rough and hilly and development costs were high.
69. It seems therefore that it should be quite feasible to sell land on the outskirts of development for 50 cents per square foot, or even less. At first glance at the valuation tables this does not appear to make much difference to the rents required for upper floor flats. Actually however for Type A under private owner- ship it makes a difference of $7-$8 on the whole house. In the valuations it has been assumed that this increase is almost entirely counterbalanced by an increase in shop rents, but, if this cannot be obtained, it must be charged to the upper floor tenants. Actually it represents a saving of $1,000 per house. If 8.000 houses are to be erected (the estimated shortage) the total saving will be $8,000,000.
70. Normal practice, in Hong Kong, in valuation work, is to reckon on 8% interest clear of all outgoings, but it is not normal to reckon as an outgoing the amount required for sinking fund to replace worn out buildings. An average of 2% for sinking fund would be reasonable, and if allowed for as part of running costs, would reduce nett interest to 6%. Usual outgoings are Crown Rent, Rates, Insurance and Repairs, and Empties. House property in Hong Kong is not held by a small group of wealthy landlords; it is distributed amongst large numbers of landlords owning a few houses each, and for many the rent from their houses is their sole means of livelihood. These landlords must rely on a certain profit or go out of business. Reference to the valuation tables (Table 2) shows that normally therefore the lowest figure for which they can rent an upper floor in Type A is about $18 or $19 per month, unless an unusually high rent is obtained for the ground floor shop. How then can they cater for the needs of those whose maximum rent must not exceed $7 per month? Even for this class two or more families must share a floor; for those who cannot afford even this small rent overcrowding is inevitable. With Type B house under similar circumstances the rent for a single floor is reduced to $9 per month or practically half the rent for Type A. Legally however Type A could accommodate two normal families whilst Type B could only house one.
The rent per family would therefore remain the same but the accom- modation provided in Type B is a great improvement over that in Type A. The rent however is still nearly twice as high as the level required.
71. Table 3 Appendix IV shows the same types of housing as in Table 2 but with one change in the conditions; they are considered as being under Government, instead of private, ownership. At 6% nett interest the lowest rent for a flat is $8 per month compared with $9 under private ownership. Under