TNAG-1447-FCO40-1931-Executive-Council-of-Hong-Kong-memoranda-and-minutes-of-meet-1986 — Page 97

CONFIDENTIAL

For information

(7.1.86)

NOTE FOR EXECUTIVE COUNCIL

XCCI (86) 4 Copy No....

RENT INCREASES FOR GRADED SHOPS IN FORMER RESETTLEMENT ESTATES

Introduction

the Housing Authority's proposed

graded shops in

former information before

This paper concerns rent increases for some 7,700 resettlement estates

estates and is for Members' the proposals are implemented.

Background

2

Most of the graded shops in former resettlement estates were originally allocated at very low rents to squatters whose squatter shops, pigsties or cultivated area were cleared for development. Since 1976, rents for these shops have been increased biennially at a rate of 25%.

3

In 1984 when the rents for these graded shops were last reviewed, a departure from the pattern of a flat rate increase was made. While a 25% increase continued to apply to the shops in Mark I and II Blocks as on previous occasions, the increase for shops in Mark III to V Blocks was based on a sliding scale ranging from 25% to 75%, taking into account the difference between the existing rents and the assessed market

rents.

Need for adjustment to rent levels

4

Despite the previous increases, rent levels for these graded shops are still only between 6% to 28% of market level. The working account for these premises shows a deficit of $9.8 million in 1984/85 which is expected to increase to $15.9 million for this financial year. The forecast deficit in 1986/87 is $20.9 million if the present rents remain unchanged. Furthermore, tenants of graded shops have the right to dispose of their tenancies for financial profits and considerable sums are involved in such transactions. Tenants of the Housing Authority's other

other commercial properties expected to pay rents at market levels.

HKH 011/2 ник

RECEIVED IN REGISTRY

1 0 JAN 1986

DESK OFFICER

INDEX

are

REGISTRY

PA

| Action Taken

CONFIDENTIAL