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APPENDIX 10.
HOUSING FINANCE- ** B",
The chief reason why some form of subsidy to property owners is necessary, if building reconstruction in this Colony is to be encouraged, can be traced back to the rent restrictive legislation introduced in 1939. At that time, building work slowed down very considerably because the cost of materials had begun to rise and rentals were fixed at their existing level.
In 1940 practically all building ceased. The regulations requiring British women and children to leave the Colony caused many foreign type houses and flats to become vacant, and in several cases landlords had to reduce their rents by 25 per cent. or more in order to retain tenants, who, being faced with the expense of keeping homes in two places, decided to live with friends unless their rent was substantially reduced.
It may therefore be said that, for much of the foreign-type accommodation, rentals were at an abnormally low level in 1941.
In 1946 we find ourselves faced with a very heavy increase in the cost of all materials. Landlords see no possibility of earning a fair return on their properties in relation to generally increased prices.
If all restrictive legislation were repealed, rents would rise very considerably. This would probably make matters sufficiently attractive for landlords to re-condition premises which they would otherwise leave untouched until such time as the cost of materials came down. Free funds might also find investment in new building work immediately sufficient materials were available.
The increase in rents would, however, raise the cost of living; wages would perforce go up, also the prices of necessities, thus promoting general inflation.
The present position is this:-
For a limited number of better class properties, tenants can be found who are quite willing to carry out the necessary repairs, on condition they are granted leases at 1941 rent levels; but by far the majority of private owners whose properties are considerably damaged will not carry out repairs at their own cost.
The urgent need for more accommodation has been made amply clear in the Interim Report.
The only possible way in which new accommodation can be provided is to have an adequate supply of building materials available in the Colony. Without these materials, and the necessary technical staff to control their use, no reconstruction plan, however good, can begin to take shape.
Every encouragement should be given to private enterprise to produce building materials locally, and it might even be worth while for Government to subsidise experiments in the manufacture of such articles as special types of floor tiles, concrete window frames, porcelain door knobs, etc. A committee might be set up to organise such an experimental scheme.
In view of the importance of this Colony, it does not seem to me unreasonable to expect that the Home Government will allow the Hong Kong Government a rehabilitation loan at a low rate of interest. The loan could be repaid over a period, of, say, sixty years.
Finance alone, however, without the immediate prospect of obtaining materials, would be insufficient. "Easy" money and lack of materials would push prices up and the tendency towards general inflation would become marked.
If possible, any loan should be obtained in materials, which would go into a pool from which they would be issued according to the best interests of the community.
When materials are available, encouragement will have to be given to property owners to make use of them. This can be done by Government subsidising materials and labour for the repair of approved properties at prices in keeping with the rent which the property owners are allowed to charge. In other words, if rents are to be kept at their