XN000022-1979-05-04 — Page 5

FRIDAY, MAY 4, 1979

AN ADMINISTRATIVE CHANGE PROVIDES THAT LANDLORDS AND TENANTS MAY OPT BY AGREEMENT TO EXCLUDE TENANCIES FROM RENT CONTROL BY REFERENCE TO THE COMMISSIONER OF RATING AND VALUATION INSTEAD OF TO THE TENANCY TRIBUNAL AS AT PRESENT. THIS WILL MAKE THE PROCEDURE EASIER AND QUICKER.

GOVERNMENT PROPOSES UNDER PART V OF THE ORDINANCE THAT THE PERIOD OF NOTICE OF TERMINATION IN DOMESTIC TENANCIES SERVED BY LANDLORDS TO TENANTS BE EXTENDED FROM SIX MONTHS TO 12 MONTHS. COMMENTING ON THIS, THE SPOKESMAN SAID THAT TENANTS IN POSTWAR DOMESTIC PREMISES WHOSE TENANCIES ARE ABOUT TO EXPIRE WILL THUS HAVE A LONGER PERIOD TO DISCUSS THE TERMS OF RENEWAL OF TENANCY WITH THEIR LANDLORDS, OR TO MAKE OTHER ARRANGEMENTS IF THEY WISH.

THE SPOKESMAN SAID THAT THESE MEASURES FOLLOWED CAREFUL INVESTIGATION BY GOVERNMENT OF THE SUPPLY SITUATION OF FLATS AND OF THE LEVEL OF RENTS ON RENEWAL OF LEASES. HE SAID THAT THERE WAS A HIGH DEMAND FOR FLATS AT PRESENT, PARTICULARLY LARGE AND MEDIUM FLATS, AND THAT THE BEST ANSWER TO THE PROBLEM IS TO INCREASE THE SUPPLY. RENT CONTROL, HE POINTED OUT, DOES NOT INCREASE SUPPLY.

AS TO THE RATE OF SUPPLY, THE SPOKESMAN SAID THAT IN THE CURRENT YEAR, 30,000 FLATS ARE EXPECTED TO BE COMPLETED BY THE PRIVATE SECTOR AND 35,000 IN THE PUBLIC HOUSING PROGRAMME, MAKING A TOTAL OF 65,000 A RECORD LEVEL, AND AN INCREASE OF NEARLY EIGHT PER CENT ON HONG KONG'S PRESENT HOUSING STOCK IN ONE YEAR. THE PROJECTED LEVEL OF PRODUCTION FOR 1980 IS THE SAME.

THE SPOKESMAN SAID FROM A SPECIAL REVIEW OF THE SITUATION, IT WAS ESTIMATED THAT IN RESPECT OF SMALL FLATS NOT NOW UNDER RENT CONTROL, INCREASES IN RENT ON RENEWAL OF LEASE IN THE PAST THREE MONTHS RANGED AROUND 21 PER CENT TO 25 PER CENT THAT IS, JUST ABOVE THE INCREASES PERMITTED UNDER CURRENT RENT CONTROL LEGISLATION. RENT INCREASES, HE SAID, WERE NOT SIGNIFICANTLY OUT OF LINE WITH OTHER PRICE INCREASES. THE MAIN REASON FOR THE HIGH DEMAND FOR FLATS WAS THE SUBSTANTIAL INCREASE IN REAL INCOME OVER THE LAST FIVE OR SIX YEARS. THIS VIEW IS SUPPORTED BY THE INCREASING PROPORTION OF OWNER-OCCUPIERS IN NEW FLATS -- IN RECENT YEARS, ABOUT 70 PER CENT OF NEW FLATS HAVE BEEN BOUGHT FOR OWNER-OCCUPATION.

AS FOR REPORTED BIG INCREASES IN RENTS FOR SOME MEDIUM AND LARGE FLATS THE SPOKESMAN SAID THAT UNDOUBTEDLY THERE WERE CASES WHERE LARGE INCREASES WERE ASKED FOR AND GENERALLY SPEAKING, INCREASES ON RENTS FOR LARGE AND MEDIUM FLATS WERE HIGHER THAN FOR SMALL FLATS. GOVERNMENT FELT THAT THE BEST WAY TO SOLVE THIS PROBLEM WAS BY INCREASING SUPPLY.

DURING 1979 AND 1980, 1,775 MEDIUM FLATS AND 705 LARGE FLATS ARE PROJECTED TO BE COMPLETED. IN ADDITION, 3,200 HOUSES ARE LIKELY TO BE COMPLETED. THIS, HE THOUGHT, WOULD VERY GREATLY REDUCE THE PRESSURE ON THIS SECTOR OF THE HOUSING STOCK, WITH FAVOURABLE EFFECTS ON RENTS BEING ASKED.

/IN ADDITION