2
In spite of its official preservation in this way, we gather that for some reason the Secretary of State's ruling no longer holds good. We should like to know why, and also what precisely are the Government's ideas as to the terms on which renewals should be granted.
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To emphasize the uncertainty that exists, we point out in our letter (paras. 11 & 14) that, in 1915, "no premium" was apparently the Government's policy. In 1925, the first announce - ment is made of a "renewal fine" or "premium" (I understand the terms are synonymous). We also remark that the announcement made in 1925 seems to call for elucidation in the matter of premium on "land" and "buildings" respectively.
As the Chamber sees it, the Government in Hong Kong is in a peculiar position. It is at once a land monopolist and the guardian of the general public interest. To carry out these two somewhat conflicting functions fairly is no easy matter.
If the principle is that the lessee has, in effect, to re- purchase his land and buildings, difficult questions of valuation arise, and in that connection we suggest an Arbitration Board. We think this is necessary and will be welcomed, because in any dispute the Government is in the position of an interested party.
As we see it, Crown rents have now risen to such an extent ́ that the rent represents very nearly the landlord's full return, and premium on renewal should be small.
As to the buildings on the site, the question has two sides to it.
In some cases there has been recent re-building, in consequence of which new and valuable buildings are in existence.
The re- builders should not be mulcted, considering that they have made a substantial contribution in extra rateable value.
In most cases the problem concerns obsolescent buildings. The method of calculating their value calls for careful consider- ation. The best plan, in the public interest, would appear to be for the Government to put a low value on them and to encourage re- building in the early years of the new lease.
A few other points are mentioned in our draft letter, but I will not take up any more time at this stage.
We shall be very glad to hear the Government's views on the main question, namely, renewal terms; and why these old instructions of the Secretary of State at the end of last century have been over-ruled: because there is no doubt they have become known in the Colony, and a great number of people have been under the impression that renewal would not be subject to the payment of premium.
11
Discussion.
The Hon. Mr. Caine said he was not sure that the Secretary of State's Instructions had been correctly quoted. The Secretary of State said that in future leases of Crown land should be for periods not exceeding 75 years" and that at the expiration of the term there should be offered a "renewal of the lease upon such an advance of Crown rent as is justified by the then value of the land, and without fine". That did not mean increasing the Crown rent merely to the level of the standard Crown rents being charged for similar properties in the same area because (as the Chamber of Commerce pointed out in its draft letter) the Crown rents made no pretence of being equal to the full value of the land.
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The system of disposing of land in Hong Kong whether rightly or wrongly -- was to charge a comparatively small Crown rent and to