XN000022-1981-07-08 — Page 3

WENDESDAY, JULY 8, 1981

+FLATS ARE NOT AVAILABLE FOR RENT AT PRICES WHICH PEOPLE CAN AFFORD TO PAY.+

HE SAID HE AGREED THAT NOW IS NOT THE TIME TO PHASE OUT RENT CONTROL.

FOR THE SAME REASONS, HE ADDED, NOW IS ALSO NOT THE TIME FOR ANY RELAXATION OF RENT CONTROL.

ON THE PROVISIONS OF THE BILL, FR MCGOVERN SAID HE AGREED TO EXTEND PART II OF THE EXISTING ORDINANCE FOR ANOTHER TWO YEARS, BUT OPPOSED THE RAISING THE BIENNIAL CEILING ON RENT INCREASES FROM 21 TO 30 PER CENT AND WITH ALL THE PROPOSED EXCLUSIONS ESPECIALLY THE EXCLUSION OF NEW PREMISES GETTING FIRST OCCUPATION PERMITS.

HE SAID: +FIRST LETTINGS OF NEW BUILDINGS, AND NEW LETTINGS OF OLD BUILDINGS ARE ALREADY EXCLUDED UNDER THE PRESENT LAW.

+THE FURTHER EXCLUSIONS ARE BOTH UNNECESSARY AND HARMFUL.

+I PREDICT THAT JUST AS THE SITUATION GOT OUT OF HAND IN 1979 FORCING THE LAW TO INCLUDE ALL THAT HAD PREVIOUSLY BEEN EXCLUDED, SO TOO IN A SHORT TIME TODAY'S RELAXATIONS WILL HAVE TO BE INCLUDED IN A FURTHER AMENDMENT.+

BY THAT TIME THE DAMAGE WOULD HAVE BEEN DONE AND RENTS WOULD HAVE RISEN TO A NEW HIGH LEVEL PLATFORM EVEN FURTHER OUT OF REACH OF THOSE WHO ARE ALREADY PAYING TOO HIGH A PROPORTION OF THEIR INCOME ON RENT, HE ADDED.

THE HON S.L. CHEN FELT THAT INCREASED SUPPLY OF DOMESTIC ACCOMMODATION WAS EVIDENTLY THE ONLY GENUINE SOLUTION TO HONG KONG'S HOUSING PROBLEM.

WHILE WELCOMING THE GOVERNMENT'S ANNOUNCEMENT THAT EFFORTS SHOULD BE MADE TO PHASE OUT RENT CONTROLS AS SOON AS CIRCUMSTANCES PERMIT, HE REITERATED THAT MEASURES AIMED AT ACHIEVING A BALANCE BETWEEN THE SUPPLY AND DEMAND OF DOMESTIC PREMISES MUST BE TAKEN WITHOUT DELAY.

+THESE SHOULD INCLUDE INCREASES IN LAND SUPPLY AND PUBLIC HOUSING PRODUCTION, AN EXPANDED HOME-OWNERSHIP SCHEME WITH PRIVATE SECTOR PARTICIPATION AND, IF NECESSARY, APPROPRIATE ANTI-SPECULATION ACTIONS IN THE PROPERTY MARKET, HE SAID.

TURNING TO THE RENT INCREASE CEILING. MR CHEN APPRECIATED THAT IT WAS PRACTICALLY IMPOSSIBLE TO ARRIVE AT A RATE THAT WOULD BE FAVOURABLY ACCEPTED BY ALL.

HOWEVER, HE THOUGHT THE PROPOSED 30 PER CENT CEILING IS MORE REALISTIC GIVEN THE PRESENT STAGE OF ECONOMIC CONDITIONS.

+WE ARE TOLD THAT FACTORS INCLUDING THE BANK INTEREST AND INFLATION RATES, THE NOMINAL AVERAGE DAILY WAGE INDEX AND THE LIKELY FUTURE RATES OF INCREASE IN FAIR MARKET RENTS HAD ALL BEEN TAKEN INTO CONSIDERATION BY THE COMMITTEE OF REVIEW IN RECOMMEND ING A SUITABLE RENT INCREASE CEILING.

/+ALTHOUGH THE