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Sir Geoffry Northcote was consulted here by the Department, and he personally advised that the concession to the sitting tenant might take the form of a renewal of the lease on payment of rent and premium, both calculated on the value of the land and buildings, but that a rebate of up to 50 per cent of the premium might be offered provided that the tenant had fulfilled all the obligations of maintenance and development under the old lease.
Certain of the principal leaseholders have employed Mr. H.W. Looker in this country to advise them. Mr. Looker was head of the principal legal firm in Hong Kong for very many years, and was an M.P. here in the 1920s for a short time, and is a past President of the China Association. He has had one or two interviews with the Department, and urges on us that the leaseholders (who will be supported by the Unofficial Members of the Legislative Council) will maintain their objection to any solution which openly includes a demand for a further payment of premium as a condition of a new lease: that will be a point of principle with them. But he thinks they would accept a solution under which the new rent on renewal might be something rather more than would be actually justified by re-assessment according to the current rate of Crown rent for the locality, and would include something extra in consideration of the premium which would normally be payable on a strictly fresh lease. This latter suggestion is the one which is embodied in the draft despatch now submitted.
I invite attention to Sir Geoffry Northcote's letter to me No. 12 in this file, in which he says that a point of principle is really involved in this problem in Hong Kong which requires to be considered in relation to Colonies generally where early leases will sooner or later be running out, and the matter of the terms of their renewal will be coming up for decision on points of principle. Personally I feel that a decision on this small group of 75 year leases in Hong Kong need not affect or be affected by the broad questions of principle which may have to be considered over a wider field.
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