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4
As for the future, the fact that the amount of available building land in Victoria is limited indicates rather that prices will be maintained than that they will drop. If the land is wanted it will sell at ruling rates, if it is not wanted, it will not sell at any price.
(c) Producing a great decline in the demand for Crown lands and consequent falling off in value.
I opine that the price of land is dependent on the demand and not the demand on the price.
(d) "Increasing the stringency in the money market by rendering many properties non-negotiable as securities for loans, any lease having less than 60 years to run being regarded as insufficient by trustees and corporations.”
If the suggested conditions of renewal of leases mentioned earlier in this despatch are made term of leases to be granted hereafter, this objection vanishes even if it is valid. But it does not appear to me to be valid, for if money is tight already, that means that there is no money to invest in mortgages; and should the money market become less stringent, more money will be set free which can be invested or not as parties like in mortgages or other securities and in stock or shares.
7. As regards the second main result predicted by the Chamber of Commerce, viz., the checking of the expansion of the city of Victoria, facts already stated and reasons already given negative the likelihood of the prediction being fulfilled. If it will be more remunerative to purchase existing buildings, pull them down and re-erect, economizing the area by increasing the altitude, this fact will not be lost sight of by the owners who will not be likely to sell property which can be dealt with in this manner more profitably than by purchasing fresh lands. The seller must appear before there can be a purchaser. Further, the altitude of buildings is regulated by law and it will be found in the majority of cases the maximum authorised altitude has been already attained.
8. The third main result, viz., the hesitation of capitalists to invest in industries carried on on land held on only a 75 years' lease is not borne out by the facts, for quite recently Messrs. Shewan, Tomes & Co. have started a large cement industry upon land held on such a tenure, although it is true that they have since applied for an extension of lease.
9. The answer to the fourth main objection is that there is nothing to show that the Chinese would not have invested in lands leased for 75 years, and will not continue to do so. Of course a lease for 999 years is a more tempting security than a lease for 75 years. The more probable reason for Chinese capital being invested in Hongkong is to be found in the higher security offered by investment in a British Colony.
10. With respect to the fifth main objection, viz., the increase in rents and the pressure on landlords, if a renewal of leases on the basis already propounded is granted this anticipated increase will not occur, or, if it does, will not be due to the 75 years' lease system, and as for landlords being pressed I cannot follow the argument that increase of rents (if such argument is intended) will augment the pressure on landlords who are well able as a rule to take care of their own interests. If this is not the meaning of the objection, I do not understand what it means. Under any circumstances if a landlord is content with a nett return of 5% on his buildings, it seems to me that on a 75 years' lease, his investment is a remunerative one. Again, even if rents rise as predicted, the rates payable will be increased and the revenue receive an accretion for the benefit of the whole Colony.
11. I have also orally consulted several of the leading men of the Colony, but find it difficult to gather, from their advice, the information which is necessary to enable me personally to form a conclusive opinion on the matter, because most of the local gentlemen who understand the intricacies of the question are directly interested in the practically unlimited tenure of land. Nevertheless, I have ventured to place before you my criticisms as above, for some of the arguments adduced against your proposal seem to me to be fallacious and others to be pushed too far.
12. Generally, I would remark as follows :--
441
(a) there appears to be nothing in local circumstances to differentiate Hongkong in respect of the terms of leases, from other great centres of population, for I presume that in London and other places, banks, clubs, insurance offices, &c., and palatial private houses are often built on land leased for 75 to 99 years.
(b) in Hongkong, where men come and go, 75 years would as a rule cover three generations.
(c) houses as built for Chinamen at least will not last more than 75 years.
(d) unless the Government wishes to resume the land on the expiration of a 75 years' lease, the question of compensating the tenant for improvements will not arise, because I assume that here, as elsewhere, if the lessee wishes to renew at a rent based on the prevailing value of land, the Government will grant him the first offer.
(e) the public good comes before the private gain of individuals and it therefore seems to be just that the Colony in general and not the particular man should get the advantage of the unearned increment.
13. In view however of the consensus of opinion amongst the landowners in the Colony concerning the detrimental effect of your proposal if it is carried out, it has occurred to me that it might be wise to distinguish between the land on the Praya Reclamation and land in other parts of the city of Victoria.
The Crown land still available for sale on the Praya Reclamation is 112,650 sq. ft. or about 2 acres. This land which fronts the harbour, is likely to be occupied by substantial mercantile buildings destined to last longer than 75 years. I suggest therefore for consideration that sites on the Praya Reclamation should be treated in an exceptional manner and be leased for terms of 999 years subject to the condition that the Crown Rent payable be revised at the end of every 50 years or so, thus dividing the unearned increments between the Government and the occupier.
I am further of opinion that in the case of leases for 75 years or 99 years it should be definitely laid down that the original lessee or the assignee in possession on the expiration of the terms should be offered the renewal of the lease on the conditions already adverted to and if the land be resumed by the Government compensation for improvements and disturbance will be awarded to the aforesaid lessee or assignee.
I have, &c.,
(Signed) W. BLACK.
The Right Honourable
JOSEPH CHAMBERLAIN, M.P.,
&c., &c., &c.
HONGKONG. No. 820.
DOWNING STREET,
9th December, 1898.
I have the honour to acknowledge the receipt of Major General Black's despatch No. 284 of the 6th October last, enclosing copies of letters from the Hongkong Chamber of Commerce, certain business firms, and other gentlemen connected with the Colony protesting against my decision that the leases of Crown Lands in the Colony should in future be reduced from 999 to 75 or at the longest 99 years.
2. I have most carefully considered the arguments put forward in these letters, but I can see no sufficient reason for reconsidering the decision contained in my despatch No. 132 of the 23rd May last.
66
4
As for the future, the fact that the amount of available building land in Victoria is limited indicates rather that prices will be maintained than that they will drop. If the land is wanted it will sell at ruling rates, if it is not wanted, it will not sell at any price.
(c) Producing a great decline in the demand for Crown lands and
falling off in value."
consequent
I opine that the price of land is dependent on the demand and not the demand on the price.
(d.) "Increasing the stringency in the money market by rendering many proper- ties non-negotiable as securities for loans, any lease having less than 60 years to run being regarded as insufficient by trustees and corporations.”
If the suggested conditions of renewal of leases mentioned earlier in this despatch are made term of leases to be granted hereafter, this objection vanishes even if it is valid. But it does not appear to me to be valid, for if money is tight already, that means that there is no money to invest in mortgages; and should the money market become less stringent, more money will be set free which can be invested or not as parties like in mortgages or other securities and in stock or shares.
7. As regards the second main result predicted by the Chamber of Commerce, vis., the checking of the expansion of the city of Victoria, facts already stated and reasons already given negative the likelihood of the prediction being fulfilled. If it will be more remun- erative to purchase existing buildings, pull them down and re-erect, economizing the area by increasing the altitude, this fact will not be lost sight of by the owners who will not be likely to sell property which can be dealt with in this manner more profitably than by purchasing fresh lands. The seller must appear before there can be a purchaser. Further, the altitude of buildings is regulated by law and it will be found in the majority of cases the maximum anthorised altitude has been already attained,
S. The third main result, vic., the hesitation of capitalists to invest in industries carried on on land held on ouly a 75 years' lease is not borne out by the facts, for quite recently Messrs. Shewan, Tomes & Co. have started a large cement industry upon land held on such a tenure, although it is true that they have since applied for an extension of lease.
9. The answer to the fourth main objection is that there is nothing to show that the Chinese would not have invested in lauds lensed for 75 years, and will not contigne to do Be. Of course a lease for 999 years is a more tempting security than a lease for 75 years. The more probable reason for Chinese capital being invested in Hongkong is to be found in the higher security offered by investment in a British Colony.
10. With respect to the fifth maw objection, ric., the increase in rents and the pressure on landlords, if a renewal of leases on the basis already propounded is granted this anticipated increase will not occur, or, if it does, will not be due to the 75 years' lease system, and as for landlords being pressed I cannot follow the argument that increase of rents (if such argument is intended) will augment the pressure on landlords who are well able as a rule to take care of their own interests. If this is not the meaning of the objection, I do not understand what it means. Under any circumstances if a landlord is content with
a nett return of 5% on his buildings, it seems to me that on a 75 years' lease, his investment is a remunerative one. Again, even if rents rise as predicted, the rates payable will be increased and the revenue receive an accretion for the benefit of the whole Colony.
11. I have also orally consulted several of the leading men of the Colony, but find it difficult to gather, from their advice, the information which is necessary to cuable me personally to form a conclusive opinion on the matter, because most of the local gentle- men who understand the intricacies of the question are directly interested in the practically unlimited tenure of land. Nevertheless, I have ventured to place before you my criticisms as above, for some of the arguments adduced against your proposal seem to me to be fallacious and others to be pushed too far.
C
12. Generally, I would remark as follows :--
441
(a) there appears to be nothing in local circumstances to differentiate Hongkong in respect of the terms of leases, from other great centres of population, for I presume that in London and other places, banks, clubs, insurance offices, &c., and palatial private houses are often built on land leased for 75 to 99 years.
(b) in Hongkong, where men come and go, 75 years would as a rule cover
three generations.
(c.) houses as built for Chinameu at least will not last more than 75 years. (d) unless the Government wishes to resume the land on the expiration of a 75 years' lease, the question of compensating the tenant for improvements will not arise, because I assume that here, as elsewhere, if the lessee wishes to renew at a rent based on the prevailing value of land, the Government will grant him the first offer.
(e.) the public good comes before the private gain of individuals and it therefore seems to be just that the Colony in general and not the particular man should get the advantage of the unearucd increment.
13. In view however of the consensus of opinion amongst the landowners in the Colony concerning the detrimental effect of your proposal if it is carried out, it has occurred to me that it might be wise to distinguish between the land on the Praya Reclamation and land in other parts of the city of Victoria.
your
The Crown land still available for sale on the Praya Reclamation is 112,650 sq. ft. or about 2 acres. This land which fronts the harbour, is likely to be occupied by substantial mercantile buildings destined to last longer than 75 years. I suggest therefore for consideration that sites on the Praya Reclamation should be treated in an exceptional manner and be leased for terms of 999 years subject to the condition that the Crown Reut payable be revised at the end of every 50 years or so, thus dividing the unearned increments be- tween the Government and the occupier.
I am further of opinion that in the case of leases for 75 years or 39 years it should be definitely laid down that the original lessee or the assignee in possession on the expiration of the terms should be offered the renewal of the lease on the conditions already adverted to and if the land be resumed by the Government compensation for improvements and disturb- ance will be awarded to the aforesaid lessee or assignee.
I have, &c.,
(Signed) W. BLACK.
&e..
The Right Honourable
JOSEPH CHAMBERLAIN, M.P.,
Gr.,
&e.
HONGKONG. No. 820.
DOWNING STREET,
9th December, 1898. S-I have the honour to acknowledge the receipt of Major General Black's despatch No. 2×4 of the 6th October last, enclosing copies of letters from the Hongkong Chamber of Commerce, certain business firms, and other gentlemen connected with the Colony protest- ing against my decision that the leases of Crown Lands in the Colony should in future be reduced for 999 to 75 or at the longest 99 years.
2. I have most carefully considered the arguments put forward in these letters, but I can see no sufficient reason for reconsidering the decision contained in my despatch No. 132 of the 23rd May last.
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