Flagged. (:85) on 54057/40_
CONFIDENTIAL.
(CAA894/45).
-54057/11/13 54247/06
Sir,
19
GOVERNMENT HOUSE,
Hong Long,
26th June, 1946.
sex
I have the honour to address you on the subject of the Crown leases which were granted during the last century for ter..s of seventy-five years with no provision as to renewal.
2.
This matter was the subject of numerous despatches prior to the enemy occupation of the Colony and it has assumed a new iportance by reason of the wide-spread destruction of property, particularly residential property in the Hill District.
3.
The rehabilitation of residential property is a matter of great urgency and property owners who hold under leases which have only a few years still to run have naturally expressed anxiety to be acquainted with the terms on which new Crown Leases would be granted before they undertake the very heavy expenditure which rehabilitation will entail.
4.
After discussion with the Executive Council, I issued on the 13th June, a press notification designed to acquaint the public with the policy of the Government. A copy of this notifica- tion is enclosed.
5.
The majority of the terms embodied in the enclosure are "common form" to the terms of grants made when there is a surrender of the outstanding portion of the ter of an existing lease and the grant of a new lease, but certain innovations mentioned in the subsequent paragraphs of this despatch have been introduced to cover points on which there had been agreement before December, 1941, or which arise particularly out of the destruction due to operations or to the activities of looters.
6.
It will be noted that paragraph 4 (b) of the enclosure implements the suggestion made in paragraphs 4 and 5 of Lord Moyne's despatch No. 37 of 17th March, 1941, in that it allows the Crown lessee to elect whether he should pay the renewal premium in a lump sun or by instalments spread over a number of years.
7.
If normal conditions had prevailed effect might have been given to the proposal that the premium should be reduced in proportion to the good condition of the premises on the expiry of the ter Unfortunately in very many cases the premises have been completely gutted and, with the present high cost of labour and materials, it is not unlikely that the cost of rehabilitating the shell of the building will frequently exceed the original cost of the building and may often exceed the amount of any renewal pemium which might be payable.
8.
It appeared to me not inequitable that the Crown, as ground landlord, should share solet ing of its tenant's burden, but above all, I felt that there was little prospect that leaseholders would undertake the rehabilitation which is so urgently necessary if they found themse..ves called upon to pay the full premium in addition to the abnormal cost of rebuilding. In these circumstances I indicated in poragraph 6 of the nclosure that applications would be entertained for the remission of the premiu which would otherwise have been payable to the extent of one-half of the necessary cost
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