TNAG-0669-FCO40-818-Policy-on-housing-and-resettlement-in-Hong-Kong-1977 — Page 12

C.S. 166

CONFIDENTIAL #2

For discussion

on 20th December 1977

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XCC(77)94 ›

Copy No Page 1

MEMORANDUM FOR EXECUTIVE COUNCIL

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INCREASES IN GRADED SHOP RENTS IN FORMER

RESETTLEMENT ESTATES

31

Background

INDER

No 8.16/12

There are about 11, 000 graded shops in former Resettlement estates which were originally allocated at very low rents to squatters whose squatter shops, pigsties or cultivated areas were cleared for redevelopment. Up to 1st April 1976, there had been no increase of rent for these shops, except for the introduction of the grading system in 1962 (whereby shops were placed in four grades and charged rent accordingly) and a straight increase in 1969 for shops in Mark I/II blocks only. As well as the advantage of low rental, shop tenants have the right to dispose of their shop tenancies for their own profit. Since the original allocation, over 50% of these shops have been thus assigned, with the proceeds going to the outgoing tenants.

2

In April 1976, graded shop rents were increased by a flat 25%. The increase, in cash terms ranged from $10 to $32 per month for about 92% of all shop tenancies. In spite of opposition from shop tenant organisations, the rent increase was implemented with the firm backing of Government.

Proposal

3

The Housing Department now proposes that inclusive rents of all graded shops in former Resettlement estates should be increased by 25% with effect from 1st April 1978. When rents were increased in 1976, it was made clear to the shop tenants that the next increase would be in two years' time i. e. April 1978. It is important that two-yearly reviews be firmly established and that tenants be persuaded to accept this, as far as possible.

4

It is the view of the Housing Department that any hidden subsidy to commercial enterprises, at the expense of public housing tenants or the public at large, is in itself unjustifiable; and it is certainly detri- mental to the Housing Authority in fulfilling its statutory task of providing sufficient and satisfactory accommodation to those in need of it. vast majority of Housing Authority tenants, commercial and domestic alike, are subject to rent increases at two-yearly intervals.

The

no reason why graded shop tenants should be treated differently. On

CONFIDENTIAL #2

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