108. The Government's policy in fixing rents in domestic estates is to recover the original capital cost (including an assumed figure of $14 per square foot for land including site formation, piling and engineer- ing cost, but excluding land to be occupied by schools, playgrounds, roads etc.), amortized over 40 years at a rate of 31% compound interest a year, plus all annually recurrent expenditure, including the cost of administration and maintenance. Rents are worked out in respect of a particular Mark of block, on the basis of contract prices for the earliest ones to be constructed, and apply to all blocks of that Mark irrespective of location and date of construction. They are liable to revision from time to time to meet rising costs of maintenance and management. Except where the ratable value of the accommodation is below the minimum at which rates are charged, there is an additional element for rates which is collected with the rent. This amounts to about 17% of the ratable value in urban areas and 11% in the New Territories. A further charge is made for water, varying according to the size of the room, in those premises where individual meters have not been installed. Rents in Mark I and II blocks, which were worked out in 1954 and revised in 1965, are considerably lower, as might be expected in view of the simpler type of accommodation. In these blocks, only the largest rooms attract rates, and for the standard room of 120 square feet the all-in charge is $18 a month, made up of $15 rent and $3 for water. An additional charge of $1.00 per room is made for those Mark I and II Blocks which have been rewired. During 1969-70 one of the Mark I blocks was converted to self-contained accommodation and new rents were fixed on the basis of the original cost plus the cost of conversion amortized over the remaining life of the block. Individual water supplies were provided in all Mark III blocks and the rent of each room was increased by $0.50 to recover this cost. The monthly charge for the tenant of a standard room of 135 square feet plus a balcony in a Mark V block in the urban areas is $34-$27.50 for rent, and $6.50 for rates.
109. Towards the end of the previous year, the first of the Mark VI blocks were occupied at Yau Tong Area C Estate. The basic rents for this latest type of domestic accommodation were calculated on the same principles outlined in the preceding paragraph. With the one excep- tion that the assumed figure of $14 per square feet for formed land was increased by $3 per square feet to take into account the rising costs of site formation and engineering works. As might be expected with increasing building and recurrent management costs, basic rents for Mark VI domestic accommodation are higher than those for Mark V-
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