4
Sec. 5/2914/46
SAVINGRAM
To the Secretary of State for the Colonies.
Officer Adminstering the Government, Hong Kong. From the Governor, Hong Kong.
Date.....
the
16 September, 1950.
1009
Your savingram No. 793 of 10th August, 1950.
Agricultural land in the New Territories occupied on
annual permits.
Your paragraph one. It may be that in ten years time, or subsequently, some of these lots would be better used as building land than for cultivation of foodstuffs, and the need to encourage the increase of local food production may have gone.
I would prefer, therefore, that the restriction should be to the effect that in no case will conversion to building land be permitted during the first ten years of the lease and that, thereafter, conversion will only be permitted if the District Commissioner is satisfied that that is in the public interest.
2.
Your paragraph two. The usual term of New Territories Leases is "for 75 years from 1st July 1898 with a right of re- newal for a further term of 24 years less the last three days". In cases of the type now under consideration in which it is proposed to grant leases up to 1997, I would prefer to retain the standard form which is well understood in the New Territories The people concerned are well aware that the present lease of the New Territories from China expires in 1997 and will make any arrangements they consider necessary in advance whatever period of days or weeks is excepted in their leases.
4. K. & PUFIC 22 SEP 1951
Page
Page
Oning in 54145/4/1/50
Extract from Memorandum for
Sir Hilton Poynton, Deputy Under Secretary of State for
(mem
Colonies
Dated 20th July, 1950
H.K. Reform Asso)
9
The second point we wish to submit for your consideration is the matter of the renewal of Crown Leases as announced on February 22, 1949, when the Government stipulated that the land leases of 75 years when expired, will have to be renewed on payment based on current valuation, otherwise the Government will unconditionally resume the land together with the super- structure built thereon. This pronouncement has seriously perturbed leaseholders whose leases have expired or about to expire, as the enforce- ment of the new reling would force them into the realms of bankruptcy by what in fact amounts to confiscation of probably the only source on which they depend for their subsistance. Consequently, the adverse effect on real estate in Hong Kong, the obstacles to development, the aggravation of the housing shortage, and the effect on the increase of the unemployed workers would further hasten the already visible signs of stagnation in the Colony. We would earnestly implore the Government to do nothing more to increase the burden of the population for in spite of the unprecedented high prices of land value, the actual returns from these properties are restricted by the rental control which creates a record disparity between investments and income. The practical alternative, in our opinion, would be to base the renewal value on the actual returns of the property minus indespensable expenses of maintenance, rates, etc. For these 75 years old leased properties were bought from the Government in an open competi- tive auction sale which should not be regarded in the same category as those properties bought through Private Treaty which stipulated a limit of development of value. These auctioned properties were bought without prior warning that at the end of 75 years, the renewal would only be granted on payment based on the current value, otherwise unconditional confiscation.
The original buyers and the subsequent purchasers were under the impression that when the lease came up for renewal it would mean only an increase of rates and charges for the routine of issuing of new leases. They had not the slightest intimation that the Government would promulgate such severe conditions on what should be an automatic renewal on expiration. If the unexpected heavy financial burden was made plain to them at the time of auctioning, property owners would not risk such a heavy investment on these properties, for the more they invest, the better the property would be developed, and the more they have to pay now for its redemption. As matters stand, the bankers have refused to accept these renewable properties as well as others soon up for reneval as colleteral for loans and overdrafts, which has seriously effected the buying and selling of real estate. Undeveloped lands that will soon expire are not being developed, and those developed properties which should be rebuilt for reasons of security and health are not being proceeded with. The displacement of building labourers and the increase of the unemployed will seriously effect peace and order, which in these critical times ought to be primary concern of the Authorities to avoid. The probable financial gain to the Government of these measures of confiscation will be seriously discounted by the loss of revenue in stamp duties, rates, property sales, profit and income taxes and other indirect reductions of the Government income due to the general stagnation of transaction.
The population of Hong Kong has hardly had a breathing space from the damages of the Second World War leaving so many of us still unrehabilitated without any compensation and the additional straw on the camel's back in the form of these conditions of the renewal of the 75 years expired leases would further retard the recovery of postwar Hong Kong.