CO129-624-7 Crown leases 1-4-1950 - 28-2-1951 — Page 4

Sec. L/M. B/L. 1845/50

in 30/3181/49.

SAVINGRAM

To the Secretary of State for the Colonies.

From the Governor, Hong Kong.

Date..............

No.

February, 1951.

(Page 2)

4

before and after the war, property owners of all classes have largely failed to appreciate that their tenure is not freehold and that virtually all land is occupied on lease from the Crown as ground landlord, the Crown having of course on the expiry of the lease the normal rights of a landlord incident to leasehold tenure. For the first time in the history of the Colony, the last few years have seen the approaching expiration of a considerable number of non-renewable Crown leases and this has, possibly for the first time, brought about a conscious realiza- tion of their position in the minds of lessees.

6.

I find no evidence that the publication of these terms has in any way retarded development. Indeed, full advantage has been taken on the Peak and Upper Levels of the concession of charging a premium based only on land values as distinct from the developed nature of the properties. It is, of course, only to be expected that banks should refuse to accept as collateral properties of which the lease is about to expire; the owner's remedy is to apply for renewal of his lease. The insincerity of the Chinese Reform Association's apprehensions is illustrated by the fact that out of 98 Kowloon lots whose leases expired this year, the owners of only three lots have so far failed to apply for new leases in accordance with the published terms. The Association's lack of understanding of their subject is emphasised by the suggestion that the renewal value (1.e. premium for new leases) should be based on "the actual returns of the property minus indispensable expenses of maintenance, rates, etc.". It would be an unwelcome shock to the Association if this were done since the result would then be that the premium would be calculated according to the value (albeit based on actual net returns from the property) not only of the land but also of the building instead of being confined only to the value of the land without any charge for the value of buildings.

7.

I propose to reply to the Association

accordingly.

Encls. 4