XN000022-1986-05-30 — Page 5

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FRIDAY, MAY 30, 1986

THE SPOKESMAN RECALLED THAT RENTS OF PRE-WAR DOMESTIC PREMISES ARE CONTROLLED BY REFERENCE TO THOSE RENTS PAYABLE AS AT DECEMBER 25, 1941 TERMED THE +STANDARD RENT+. WHEN MULTIPLIED BY FACTOR, THIS GIVES THE PERMITTED RENT, PROVIDED IT DOES NOT EXCEED THE PREVAILING MARKET RENT. THE BILL SEEKS TO RAISE THE FACTOR FROM 27 TO 30.

EXCLUDING THE MAJORITY OF RURAL VILLAGE HOUSES, THERE WERE ABOUT 2 200 PRE-WAR DOMESTIC UNITS EFFECTIVELY UNDER CONTROL AT THE END OF 1985. THE PROPOSAL TO RAISE THE FACTOR FROM 27 TO 30 WOULD RESULT IN AN AVERAGE INCREASE OF ABOUT 11 PER CENT, OR $132 PER MONTH, ON CURRENT PERMITTED RENTS, BRINGING SUCH RENTS TO ABOUT 60 PER CENT OF PREVAILING MARKET RENT (PMR).

THE BILL ALSO PROPOSES TO RAISE THE MINIMUM PERCENTAGE COMPONENT IN THE RENT INCREASE MECHANISM IN PART FROM 55 PER CENT TO 60 PER CENT OF PMR, TO BE REACHED BY ALL CONTROLLED RENTS.

THE SPOKESMAN SAID THAT AS PART OF THE REVIEW COMMITTEE'S RECOMMENDED STRATEGY OF PROGRESSIVE DECONTROL, THE COMPONENT IS INCREASED IN ORDER TO BRING EXCEPTIONALLY LOW RENTS UP TO THE GENERAL LEVELS OF CONTROLLED RENTS SO THAT RENT CONTROL CAN BE PHASED OUT WITHIN A REASONABLE SPAN OF TIME.

THIS INCREASE WOULD AFFECT THOSE TENANTS WHO ARE CURRENTLY PAYING VERY LOW CONTROLLED RENTS (BELOW 46 PER CENT OF PMR) AND HAVE IN FACT BEEN PROTECTED FOR A LONG TIME. EVEN THEN, THEY WILL CONTINUE TO PAY SIGNIFICANTLY LESS THAN NEW TENANTS OF COMPARABLE PREMISES.

THE SPOKESMAN ADDED THAT ABOUT HALF OF CONTROLLED TENANCIES STILL HAVE RENTS BELOW 60 PER CENT OF PMR, AND ABOUT ONE-THIRD PAY LESS THAN 50 PER CENT OF PMR. THE PROPOSED RISE WOULD AFFECT ABOUT 26 000 OF THE ESTIMATED 105 000 TENANCIES OF WHOLLY-LET DOMESTIC UNITS WHOSE RENTS ARE CONTROLLED UNDER PART 11.

THESE DECONTROL MEASURES SHOULD REDUCE THE CONSTRAINTS ON THE OPERATION OF MARKET FORCES ON THE ALLOCATION OF RESOURCES. FURTHER DECONTROL, DEMONSTRATING PROGRESSIVELY LESS GOVERNMENT INTERFERENCE, IS LIKELY TO INCREASE CONFIDENCE AMONG INVESTORS IN THE RESIDENTIAL PROPERTY.

THE BILL ALSO PROPOSES SOME TECHNICAL AMENDMENTS TO UPDATE THE MONETARY LIMITS IN THE EXISTING SIMPLIFIED PROCEDURES FOR RECOVERY OF SMALL PREMISES UNDER PARTS 111 AND VI, IN CERTAIN CIRCUMSTANCES.

PUBLIC VIEWS ON THE BILL WILL BE TAKEN INTO ACCOUNT AND REPRESENTATIONS MAY BE MADE TO UMELCO, AT 8 JACKSON ROAD, CENTRAL, OR THE SECRETARY FOR HOUSING, AT THE CENTRAL GOVERNMENT OFFICES, LOWER ALBERT ROAD, HONG KONG.

MEMBERS OF THE PUBLIC WHO WISH TO OBTAIN MORE INFORMATION REGARDING THESE PROPOSALS CAN SEEK HELP FROM THE DISTRICT OFFICES AND THE RATING AND VALUATION DEPARTMENT.

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