281
re-adjustment of existing boundaries of numerous lots under separate ownership. For replanning it will be essential to treat blocks of houses as units. As an illustration take a block of eight existing tenements each 15' x 60' total frontage 120'. On rebuilding only six houses should be permitted each 20' x 45′ total frontage 120'. The loss on total area is a strip 120' x 15' or 1,800 square feet. Under the existing Ordinances the owner could re-erect eight houses on the old lot, with the necessary improvements in planning required by those Ordinances. No powers exist by which the owner could be compelled to limit the number of new houses to six. Also, until the property is structurally unsafe, no powers exist under which the owner can be compelled to effect structural improvements on the grounds of public health. Before slum clearance can be effectively carried out the re sponsible authority must possess these and other similar powers, which can be exercised without involving enormous sums in compensation. The majority of owners have had ample time to provide for rebuilding and improving their property. It would be inflicting no hardship on them, on rebuilding, to make the new structures conform with modern standards, even though their rentals may not be so great as they were, a prospect which is by no means a certainty. It would certainly not be reasonable that the public should pay these owners compensation for what they ought to do in any case, nor would it be unreasonable to prevent them from re-erecting buildings which are detrimental to the public health. Compensation should be strictly limited to cover losses sustained by limitation or annullment of legitimate rights. In the case of the block used as an illustration compensation would be limited to the value of the 15 foot strip of land in rear of the buildings.
87. In some cases the redevelopment of a block may result in a nett increase in value of the property. If the 15 foot strip of land be taken off the front of the lot and used for street widening then there would be, on the ground floor, six shops with increased frontage and less competition, facing onto a wider street. These shops would each have an increased rental value which might easily more than counterbalance the loss of two shops in the block. In other countries many instances of increases in value under similar circumstances are to be found. In such a case it is only right that some portion of that increase should accrue to the planning authority. In England 75% of such betterment" is claimed by the authorities.
'
88. In theory the collection of "betterment" is simple but in practice it is not so easy, owing largely to the difficulties of assessing increased value. The simplest method is to deal with small areas at a time, resume all land and property required for redevelopment, replan the area and then sell the area allotted for building purposes.
Whilst loss in total value may be incurred it should not he directly proportionate to the reduction in the area of building land. For example. if an area of 10 acres, including 7 acres of building land; be resumed at $4 per square foot for building area, the cost of resumption would be $1,219,680. If, on replanning, only 5 acres of building land were available for sale then, at $4 per square foot, the loss would be $348,480. It is however highly probable that the 5 acres of land would increase in value to say $5 per square foot and, on this basis, the loss would only be $130,680. If circumstances are favourable the rise in value might be even greater and result in a profit instead of a loss.
89. Where property is below certain standards and cannot, at reasonable cost, be brought up to those standards, it should be possible to declare it as unfit for habitation and compel the owner to demolish it at his own cost. Large areas in Hong Kong could legitimately be cleared of buildings in this way and, when resumption is desirable, land value only would have to be paid. Land value itself should be based, not on the rentals derived from overcrowded property but on the rentals which might reasonably be derived if the property were legitimately used. If sixty people occupy a tenement, and pay $40 a month all told in rent, then the average rent paying capacity can be taken at 66 cents per head. If the tenement can only legally accommodate 28 people, then, based on the average rent paying capacity of the occupants, the total rental which can legitimately be relied on would be $18.48, say $20. It is this latter rental from which the land value should be calculated. Compensation should always be limited to values based on legitimate-
usage.
Page 285Page 286