TNAG-0809-FCO40-1014-Legislation-for-Crown-lands-in-Hong-Kong-1978 — Page 328

CONFIDENTIAL #2

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ANNEX A TO XCC(78) 26

For discussion

on 19th June 1973

MEMORANDUM FOR EXECUTIVE COUNCIL

RENEWABLE CROWN LEASES

XCC(73)58

A

B

C

On 13th March 1973 Honourable Members considered memorandum XCC(73)21, a copy of which is at Annex A, and advised that the changes described in the memorandum should be made to the legislation providing for the statutory renewal of renewable Crown leases. Subsequently, when the second reading of the Crown Leases Bill 1973 was moved by the Attorney General, several members of the Legislative Council spoke on that occasion to the effect that they could not support the motion as it stood and asked for reconsideration of the basis on which the reassessed Crown rent payable on the renewal of renewable Crown leases is to be paid. Honourable Members drew attention to the great number of associations which had joined together in opposition to the policy; to the hardship which would be experienced by small property owners; to the effect high land prices would have on the level of the assessments; and to the fundamentally opposed view which many people took to the legal interpretation of the proviso for renewal contained in the leases.

2.

In view of the extent to which the policy is opposed, it has been re-examined and the Unofficial Members of the Legislative Council consulted so as to arrive at a more acceptable solution. As a result, on 10th May 1973 His Excellency the Governor wrote to the Honourable WOO Pak-chuen proposing an entirely different method of assessment based upon rateable value and, if the scheme proposed were considered acceptable, asking for a recommendation as to the percentage level of payment recommended as being fair and reasonable. A copy of this letter and its enclosures is at Annex B (Note: the enclosures have been amended to show a 3% calculation and the presentation improved). A further table containing extra examples of industrial property was forwarded on 22nd May 1973 to the UMELCO Office (Annex C).

3.

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These proposals were used to sound out representatives of the 655 associations which have joined in opposing the former basis for reassessment: they indicated that they were 'unanimously agreed to accept the proposal of using "not more than 5%" of the current rateable value recently announced by Government as the basis for calculating the reassessed Crown rent'. However, the associations went on to point out that the formula appeared to bear more onerously upon the owner of fully developed industrial land than the owner of residential property, and that the reduction in the amount of the assessment that would have been made under the previous policy was less in respect of these fully developed flatted factory properties than for residential property. An assessment based upon rateable value relates of course to the rents actually obtainable for a particular property and therefore a greater payment has to be made because a greater return is obtainable.

C.S. 166

CONFIDENTIAL

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