}
the rents to be paid by resettled squatters should not be as far as possible related to the capital and recurrent expenditure from public funds. Whilst it was appreciated that there was obviously a limit to the amount which the new settlers could afford to pay in rent it was generally agreed that the rents should, if possible, include no greater element of subsidy than the rents charged in orthodox non-profit-housing projects.
46. For such projects the Hong Kong Government nor- mally offers the following assistance:-site formation costs are charged to public funds, land is granted at one half of the upset price and funds required for capital expenditure are advanced by Government and repaid over forty years at 31% per annum interest. Apart from this assistance such housing projects as those undertaken by the Hong Kong Housing Society and the newly formed Housing Authority must pay their way. When the experimental six-storey resettlement project was put in hand at Shek Kip Mei the initial rents were fixed arbitrarily at $10 a month for each room, with an additional $1 a month for the communal mains water supply, but the legislation which was enacted to govern the administration of the new estates provided specifically that the rent might be varied from time to time. By the time the building of the Tai Hang Tung resettlement estate was authorized enough was known of the capital and recurrent costs to make a provisional calculation of the "economic" rent-economic, that is to say, in the sense of being calculated on a basis similar to that applied to orthodox low-cost housing projects. The only difference in the method of calculation was the inclusion of site formation costs in the capital outlay on which resettlement rents were to be based. This calculation indicated that the rent of each room should be $14 a month, including the element of $1 for water. This was accordingly the rent charged at the outset in Tai Hang Tung, and rents in the six-storey buildings at Shek Kip Mei were raised and brought into line at the end of the period under review. The calculation is of some interest and is explained in outline below.
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