TNAG-0270-FCO40-306-Policy-on-housing-and-resettlement-in-Hong-Kong-1971 — Page 155

CONFIDENTIAL

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(1) As shown in Annexe 'A', the rental levels in both domestic and business accommodation are still below the 1964 peak: Tenants have had it their own way for the past four years and current increases are being made apparently with the object of restoring rents to previous levels.

(ii) Increases are likely to be more widespread in categories such as large to medium flats and flatted factories where shortages are pronounced. The good supply of Government and Government-aided housing next year should tend to damp down the modest increases now being experienced in tenement-type floors.

(iii) Increased, rents are apparent in both domestic and business tenancies and some of them are very steep as shown in Annexe 'B'. Such increases have led to an outcry in the newspapers for the imposition of rent control. supply coming forward is not likely to ease the situation in the large flat category until the latter half of 1971 but for flatted factories the supply will be adequate in 1970.

(iv) Developers are only just regaining confidence after the recession following the 1965 banking difficulties and the 1967 riots.

(v) Business generally is good and salaries and wages are higher than 1964.

(vi) Rents for luxury-type accommodation for expatriate staff are, in most cases, paid for by their employers. In the middle income group there has been, in recent years, a movement towards owner-occupation of domestic accommodation.

(vii) To select a uniform percentage increase applicable to the rents of all categories of domestic accommodation as previously provided in the Rent Increases (Domestic Premises) Control Ordinance would be difficult. If the percentage under a re-enacted Ordinance was fixed at too high a level it would present an open invitation to landlords of domestic accommodation at the lower end of the scale to increase rents to that level. If pitched at say 10 per cent as in 1963, landlords of good class accommodation would invoke the other provisions of the Ordinance to obtain much higher increases which would be very difficult to resist.

(viii) There is evidence that landlords are serving six months' notice of termination under the Tenancy (Notice of Termination) Ordinance for the purpose of obtaining vacant possession with a view to sale. Tenants not in a position to offer the prices asked by landlords would benefit if a longer period of security of tenure was available to them.

(ix) A glut of private domestic accommodation is unlikely in the future and therefore if rent increase control legislation is again introduced it will be difficult to remove it.

4.

The shortage of supply of domestic accommodation in 1962 was general and was exacerbated by demolition on a large scale. The present situation is different from 1962 in that the real shortages are apparent in only good class accommodation. On the evidence available the present problem is a short-term one which would not appear to warrant rent increase control on

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