TNAG-1857-FCO40-2632-Legislative-Council-of-Hong-Kong-memoranda-and-minutes-of-me-1989 — Page 74

HONG KONG LEGISLATIVE COUNCIL

12 July 1989

香港立法局

一九八九年七月十二日

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(c) the amendment set out in paragraph (a)(ii) above shall bot apply to

applications for a certificate under section 57 of the Landlord and Tenant (Consolidation) Ordinance made before 19 December 1989."

He said: Sir, I move the resolution standing in my name in the Order Paper.

Government's long-term objective which should be made to accelerate the phasing out of rent control, provided that social disruption and economic hardship can be avoided. Consequently, amending legislation has been passed by this Council each year since 1981 for pre-war premises, and every year since 1983 for post-war ones, in order to raise the controlled rents progressively, bringing them closer to prevailing market levels and eventual decontrol.

The first proposal in the resolution seeks to raise the permitted rent of pre- war premises covered by Part I of the Ordinance, to a more realistic level. Rents of pre-war premises are derived from a standard rent as at 25 December 1941. The current permitted rent is set at 39 times this level, and it is now proposed to increase this to 43 times the standard rent.

This change would bring the average permitted rent of pre-war premises up from 71% to 79% of the prevailing market level. It would result in an average increase of about 10%, or $150 per month, on current permitted rents and would affect about 1 350 domestic premises.

The second proposal in the resolution is to raise the so-called "minimum percentage component" in the rent increase mechanism that applies to post-war domestic premises protected under Part II of the Ordinance.

Rent increases permitted in respect of tenancies protected under Part II of the Ordinance, are limited to the difference between the current rent and the prevailing market rent, but subject to a ceiling of 30% of the current rent. However, if the new rent calculated according to this formula is less than a specified percentage (which is at present 60%) of the prevailing market rent the permitted rent increase would be the amount which will bring the new rent up to this minimum percentage. The reason for specifying this minimum percentage, which is known as the minimum percentage component is firstly to ensure that controlled rents do not fall too far out of line with the prevailing market rent and secondly to enable rent controls to be phased out within the shortest possible time without adverse social consequences.