TNAG-1029-FCO40-1279-Visits-by-FCO-officials-to-Hong-Kong-1981 — Page 31

and it was announced prior to the setting up of the Review Committee, that rent control would be short-term measures. While the government generally accepts the recommendations by the committee, it does not consider that this is the right time for a significant move to phase out rent control. Raising the percentage ceiling of permitted increases was designed to slow down the rate at which such rents have been falling behind market rents. Excluding new premises from controls was intended to encourage developers to produce flats for the rental market and to discourage hoarding by owners. Excluding the 'luxury' flats from control in two stages (only 1,000 and 1,500 tenancies respectively will be affected) reflects the government stand that it only assists those considered to be in need of protection. There is no evidence to support the claim that foreign enterprises are pulling out of HK because of high domestic rents.