TNAG-0669-FCO40-818-Policy-on-housing-and-resettlement-in-Hong-Kong-1977 — Page 65

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subsidise profit making industries on a recurrent basis, it is now proposed that the rents of the pre-1973 Housing Authority factory blocks be increased. Furthermore, it would be illogical not to increase factory rents when domestic and shop rents of Group B estates have already been increased and are subject to 2-yearly in- creases.

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Since the current rents of the old blocks have never been raised, a large increase would be undesirable and would cause opposition from the tenants. For seven estates, an increase of 25%, similar to that accepted by Group B shop tenants in April 1976, is therefore proposed. For Yuen Long Estate, the proposed increase is about 17% plus extra rates.

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This proposal, if agreed by the Housing Authority, would raise rents in these pre-1973 factory blocks from 25 - 55 cents a square foot to 32 - 69 cents a square foot, i. e. an increase of

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13 cents a square foot or $16 - $35 per unit. Details of the increase proposed are shown at Annex B. No increase is proposed for the Kowloon Bay factory blocks mentioned at paragraph 5. At Yuen Long, a slightly higher increase is proposed in order to bring the rents of the older units in line with those let in 1975 and to include rates at 9%. The proposals will raise the Authority's income from factories by about $2.1 million a year.

Timing

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It is proposed, subject to the agreement by the Housing Authority, that the new rents should take effect on 1st August, so that it will not conflict with the next rent increase for domestic accommo- dation in a few Group A estates in November this year.

Publicity

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Since the April 1976 shop rent increase which was successfully implemented, the factory tenants have been expecting a similar increase. Although there will undoubtedly be the usual complaints and publicity through the news media, and perhaps some petitions, real opposition from tenants is not envisaged because this would be the first adjustment since 1957 and because the resultant rents would still be much lower than market rents after the increase. Further, if tenants find it un- profitable to operate under the new rents, they have the option to transfer the tenancy and get a capital sum from the incoming tenant.

The

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