CO129-604-2 Crown Leases 23-2-1948 - 6-11-1948 — Page 27

Secretariat file No. 894/45.

CONFIDENTIAL

No. 218

GOVERNMENT HOUSE,

HONG KONG.

277

ath September, 1948.

Ansis (8)

para of Evel.

(1)

Sir,

2

1

de play

REOFIVED

18 SEP 1948 C.O. HEGY.

2.

I have the honour to refer to your telegram No.542 of the 14th May, 1948, on the subject of 75 years non-renewable Crown leases in reply to my despatch No.38 of 23rd February, 1948, and to inform you that I concur with the interpretation suggested in paragraph 2 of your telegram. In order to remove any possibility of ambiguity in the public announcement, I propose to amend paragraph 4 thereof to read as under:-

"4. Crown Rent. Crown rent to continue at the

rate applicable under the existing lease for the period corresponding to the unexpired residue of the original term: upon the expiration of that period the Crown rent for the subsequent term of 75 years to be reassessed, and to be such a rate as shall then be determined by Government according to the rate or scale of Crown rent being charged by Government for leases of land in the same district at that time the rate being calculated on the value of the land exclusive of the buildings thereon".

land) u!!

I agree, further, that this involves the withdrawal, in this instance, of a claim to a premium based on the developed value of the land. This point was very carefully considered I before I sent my despatch No.38, and I should like to elaborate

the reasons which led to this decision.

beeming

3.

Government is undoubtedly entitled to charge a premium for the renewal of these leases which takes account of the developed value of the land, that is, of the buildings and other improvements as well as of the land itself. If this principle were strictly applied, Goverment could in effect offer terms which would be the same as it would offer if it were selling the land and buildings at their full value to a third party. It is not suggested that this should be done, indeed, if it were, most of the lessees would refuse the terms and the land and buildings would revert to Govern- ment.

Opposition to the present proposals is in any case expected, but I consider that an attempt at this time to charge a premium based even on a part of the developed value would result in such strong and protracted opposition that we should eventually be compelled to give way. The opposition would gain support from the great disparity between the terms now to be offered and those which have already been granted on applications received up to the 16th June, 1947. The latter class of applicants have already received concessionary terms in respect of 75 years non-renewable leases which include:-

calculation of the premium on the valuation of the land only;

(a)

(16)

assessment of the value of the land at 1941 levels for calculating the premium;

Te not mat 194) levely

(c)

a rebate of premium for war damage which in many cases means that no premium is paid at all.

ow that these

THE RIGHT HONOURABLE

ARTHUR CREECH JONES, M.P.