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In January, 1934, the flat was let to another tenant at $80 per month.
This tenant left in October, 1934, and in November, 1984, the flat was let to the tenant con- cerning whom the letter above referred to was written at a rent of $70 per month. In July, 1935, this tenant asked for a reduction in rent which was refused. In December, 1935, he gave a month's notice to the landlords. In February, 1936, he was still in occupation and again gave notice. As from April, 1936, the landlords agreed to a rent of $60 per month, and although the terms of tenancy made the tenant liable for excess water charges, the landlords did not in fact claim such charges from him. In October, 1936, the tenant was three months in arrears with his reduced rent. In December, 1936, he was again two months in arrears. In February of this year the landlords notified him that his rent would be increased to $100 per month, subject to a reduction if a lease for one year were signed.
14. A European limited company submitted to us a comparative statement compiled from the company's records, which we were invited to inspect, relating to three types of Chinese tenement property owned by the company. The period covered is 1934-1937. In every case, without taking into account losses sustained by excess consumption of water, vacancies and defaults in payment of rent, which are subjects dealt with later in this Report, the statement shows throughout a decline in rent since the commencement of 1934, and in no single instance had the rent at the end of 1937 regained the level obtaining four years previously. We were assured that there was no immediate increase of rent under contemplation.
15. A Chinese limited company submitted to us figures in relation to property owned or managed by the company, which were vouched for by a leading European bank, as follows :--
(a) 328 flats, Chinese, without flush system in two streets in the Eastern dis- trict. Inclusive figures were given for the years 1929-1937. In the first street the gross annual rental fell from a maximum of $51,709.49 in 1930 to $18,633.60 in 1935, and in the second from a maximum of $51,601.90 in 1929 to $18,660.70 in 1936. In both streets average rentals of $40 per flat in 1929 had been reduced to an average of $24 by 1938, repre- senting a reduction of 40%- It is not intended to increase rents at present.
(b) 224 Chinese flats without flush system in the Eastern district. In 1930 the gross rental received amounted to $63,681.00. In 1934 it had dropped to $21,938.00. In 1937 it recovered to $38,981.50. The average reduc- tion in rent per flat was 45%. It is not intended to increase rents at present.
(e) 84 Chinese flats of concrete with flush system. In 1932, when the flats were not fully occupied, the gross rental received amounted to $81,730.25. In 1935 it had dropped to $19,214.00. In 1937 it recovered to $24,454.40. In 1930 the average rent per flat was $40. At present the average is $26-$30 per month. It is not intended to increase rents at present.
(d) 32 European flats. In 1934, when the flats were not fully occupied, the gross rental received was $20,550.00. In 1936 it had dropped to $14,838.00. In 1937 it had recovered to $18,098.13. In 1934 the average rent per flat month was $70. At present the average is $58 per month.
per It is not intended to increase rents at present.
16. A large European limited company sent us figures showing that the rents of the majority of their European flats and houses were to be increased as from 1st April, 1938, but the increase in net rental returns varying from 1:61% to 4*58%, will only in one instance exceed the net returns obtained in 1933, and that by a trivial amount. The figures for the company's Chinese fluts show an increase in rentals as from the 1st May, 1938, varying from 10:59% to 15 54%, but the com- pany acquired the property as mortgagee and entered into possession during the depression. The pre-depression rentals are not available. The net return with the proposed increases will not cover the interest charges on the amounts advanced on inortgage.
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17. A Chinese landlord, who wrote to us through a firm of solicitors, is the owner of eight and agent for three houses in Po Tuck Street, comprising 33 Chinese flats. He intends to raise the rents of these premises, but in no case does the proposed increase restore the flat rentals to the level obtaining at the beginning of 1933. In the first quarter of 1933 the total monthly rental was $742.35. Inclusive of the proposed increases it will amount to $638. At present it stands at $470.
18. A property owner, interested either as owner or agent, or as an officer of limited companies in over 200 widely distributed houses, gave evidence as to the severe losses sustained over all the premises during the depression. One of many examples supplied by him may be found in the case of 14 houses in Lockhart Road comprising 56 flats. In the case of each flat an increase in rent is imposed as from the 1st April, 1938, but in the case of only six flats does the proposed increase bring the monthly rental to a figure exceeding that obtaining at the commencement of 1933. Of these six cases, the increase over 1933 is $1 per month in four cases, $2 per month in one case and $7 per month in the remaining case. No complaint was received by us in respect of any of these six flats. As regards all the fifty-six flats, a sharp average reduction in rent was made between January, 1933, and March, 1938, and the average proposed increase does not restore the 1983 average rental. For the first quarter of 1933 the total gross receipt of rents for the 14 houses was $1,779 per month. Including the proposed increases, the gross receipt of rents will amount to $1,588 per month. We received complaints from two tenants of floors in this group of property. The first moved in in 1936 at a rent of $26 per month. It is proposed to increase his rent to $33 per month, but in 1933 the Bat was let for $35 per month. The second has resided in his flat for 5 years. In 1933 he himself paid $29 per month. In March, 1938, his rent had fallen as low as $18 per month. It is now proposed to increase his rent to $23 per month.
19. A Chinese partnership submitted detailed figures relating to premises both in Hong Kong and Kowloon. A typical example from each of the three main blocks of property affected is worthy of note.
(a) A ground floor flat in Catchick Street was let in 1930 for $45 per month.
In 1937 it was let for $19 per month.
(b) A first floor flat in North Street was let in 1928 for $28 per month. In
1937 it was let for $18 per month.
(c) A second floor flat in Chatham Road was let in 1928 for $10.50 per month.
In 1937 it was let for $7 per month.
The partnership have not notified an increase of rent, but should they do so it is obvious that on a percentage basis there may be a very considerable increase with- out exceeding the rents charged before the depression.
20. The same comment applies with equal force to 133 houses in Hong Kong and 33 houses in Kowloon, comprising respectively 488 and 102 floors separately let, in respect of which figures were submitted to us by Chinese landlords. In a few cases pre-depression figures are not available, the premises having either been first let, or entered into by mortgagees, during the depression, but the periods of vacancy in this case show that the landlords were bound to accept, in order to obtain tenants at all, rents at a very low level. Figures in Chinese were also submitted to us by landlords, but in the time and with the staff at our disposal it was not possible to examine them as fully, for we considered that of the many Chinese documents received, the first to be examined should be the complaints of tenants.
We were
able sufficiently to investigate these figures, however, to leave no doubt in our minds that these landlords, and especially a hospital, had suffered disastrous losses.
21. Hence a mere percentage of increase in rent affords no true test of undue profiteering on the part of landlords. A large property owner wrote to us on this point (in relation to an actual case) as follows:-- $40 rental reduced to $20 represents a reduction of 50% BUT $20 rental put back to its original $40 repre- sents an increase of 100%". In deciding whether an increase is unduly large,
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