XN000022-1990-07-18 — Page 4

WEDNI DAY, JULY 18, 1990

FORMULA THE

"HOWEVER, IF THE NEW RENT CALCULATED ACCORDING TO THIS IS LESS THAN A SPECIFIED PERCENTAGE (AT PRESENT 65 PER CENT) OF PREVAILING MARKET RENT, THE PERMITTED RENT INCREASE SHALL BE THE AMOUNT WHICH WILL BRING THE NEW RENT UP TO THIS MINIMUM PERCENTAGE.

"THE REASON FOR SPECIFYING THIS MINIMUM PERCENTAGE, WHICH IS KNOWN AS THE MINIMUM PERCENTAGE COMPONENT IS TO ENSURE THAT CONTROLLED RENTS DO NOT FALL TOO FAR OUT OF LINE WITH THE PREVAILING MARKET RENTS AND TO ENABLE RENT CONTROL TO BE PHASED OUT WITHIN THE SHORTEST POSSIBLE TIME WITHOUT ADVERST SOCIAL CONSEQUENCES, HE SAID.

MR TSAO POINTED OUT THAT THE AVERAGE CONTROLLED RENTS FOR PART II TENANCIES NOW STOOD AT ABOUT 62 PER CENT OF THE PREVAILING MARKET RENT. HOWEVER, FOR ABOUT 54 PER CENT OF THESE TENANCIES, THE CONTROLLED RENT WAS BELOW THIS OVERALL AVERAGE.

"IN ORDER TO ENSURE THAT CONTROLLED RENTS DO NOT FALL TOO FAR BEHIND THE PREVAILING MARKET RENTS, THE GOVERNMENT PROPOSES ΤΟ INCREASE THE MINIMUM PERCENTAGE COMPONENT FROM 5 PER CENT TO 70 PER CENT OF THE PREVAILING MARKET RENT, HE SAID.

甲申

"ASSUMING THAT MARKET RENTS REMAIN RELATIVELY STABLE, THIS WILL HAVE A NET EFFECT OF INCREASING THE NUMBER OF TENANCIES AFFECTED BY THE MINIMUM PERCENTAGE COMPONENT FROM ABOUT 7,200 TO 9,500.

"THE RESULTING ADDITIONAL INCREASE IN THE AVERAGE CONTROLLED RENT OF THE AFFECTED TENANCIES WILL BE $129 PER MONTH, HE ADDED.

ELABORATING FURTHER ON HOW THE PERMITTED INCREASE IN RENT IS DETERMINED, A SPOKESMAN FOR THE RATING AND VALUATION DEPARTMENT SAID THE PERMITTED INCREASE WAS DETERMINED BY TAKING THE LESSER AMOUNT OF THE DIFFERENCE BETWEEN THE PREVAILING MARKET RENT AND THE CURRENT RENT OR 30 PER CENT OF THE CURRENT RENT.

"HOWEVER, IF THE INCREASE SO DETERMINED, WHEN ADDED TO THE CURRENT RENT, RESULTS IN A SUM OF LESS THAN 70 PER CENT OF THE PREVAILING MARKET RENT, THE PERMITTED INCREASE WILL BE AN AMOUNT NECESSARY TO BRING THE CURRENT RENT UP TO 70 PER CENT OF THE PREVAILING MARKET RENT," HE SAID.

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THE METHOD OF DETERMINING THE PERMITTED INCREASE PERCENTAGE COMPONENTS CONTAINED THEREIN ARE PRESCRIBED ORDINANCE, WHEREAS THE CURRENT RENT IS THE RENT ACTUALLY PAID TENANT. ONLY THE PREVAILING MARKET RENT IS AN ASSESSMENT MADE BY THE COMMISSIONER OF RATING AND VALUATION.

THE PREVAILING MARKET RENT IS ASSESSED BY REFERENCE To EVIDENCE OF FREELY-NEGOTIATED OPEN MARKET RENTS, BUT NOT CONTROLLED RENTS, OF SIMILAR PREMISES IN THE LOCALITY. FINANCIAL STATUS AND PERSONAL CIRCUMSTANCES OF THE LANDLORD AND THE TENANT ARE NOT FACTORS WHICH CAN PROPERLY BE TAKEN INTO ACCOUNT IN THE ASSESSMENT.

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