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Ip party pushes to cap increases in Link rents

Top News | Cindy Wan Feb 11, 2019
The New People's Party is proposing to amend the law to cap increases in store rents under the Housing Authority and the Link REIT in public estates. Rent for stores that once belonged to the authority surged drastically after retail space measuring over one million square meters in public estates were sold to the Link Real Estate Investment Trust in 2003. Store rent in many public estates increased 132 percent from HK$25.40 to HK$58.90 per square feet between 2005 and 2017, forcing small tenants to close their business or move away. High rent results in vacant stores and leaves many shopping malls empty and nearby residents bereft of food options and cheap medical services, the party said. To cap the rate of increases in rent, chairwoman Regina Ip Lau Suk-yee is proposing a bill to amend the Housing Ordinance and Inland Revenue Ordinance. In the proposal, stores in public estates and wet markets that were sold to Link REIT, excluding parking spaces, and later resold to other private firms would be monitored. She proposed introducing a formula to calculate the maximum permitted hike, which takes the rates of change in the tenement's rateable value, median monthly household income and the Composite Consumer Price into account. She also proposed a vacancy tax, which is set at 10 to 30 percent of the tenement's rateable value depending on the store's vacancy. Stores that are vacant for less than six months would not be taxed. Ip suggested for existing tenants to be given priority in renewing contracts as many small stores were forced to give way to larger enterprises because owners refused to renew their contracts. Although Link REIT is a private corporation, Ip believed the government has the right to control the rate of increases in rent because it is a matter of public interest. "If the government can impose a vacancy tax on property owners, why can't it impose another one to lower store rent?" She asked. Ip said the proposal has been submitted to the Legislative Council's panel on housing for discussion tomorrow, and expects support from lawmakers from the geographical constituencies but not those who represent wealthy sectors. She also sent the proposal to the Transport and Housing Bureau as it is easier to pass the bill if the government adopts it as its own. It only takes a simple majority vote to pass a bill tabled by the government, but it needs a majority vote from both the geographical and functional constituencies if it is a lawmaker's bill. Federation of Trade Unions' lawmaker Alice Mak Mei-kuen supported Ip and would table the lawmaker's bill with her together. A spokesman from Link REIT said, if the bill is passed, its impact will be far-reaching as the same legal principle will be applicable to all other commercial properties. He said the company has been keeping various stakeholder groups in close communications and will actively engage the two parties for their views and suggestions. cindymt.wan@singtaonewscorp.com


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