Lease control or re-raised

Earlier, the Rating and Valuation Department showed that seasonal factors in the summer continued to drive up private housing rents. The rental index rose by 1.1% in July. It was the biggest increase in the past 14 months after May last year. It rose for 8 months and accumulated 4.4 points. %.

In the same week, another report about the mainland, Shenzhen rents have continued to rise since last year. According to the statistics of the Shenzhen Survey Team of the National Bureau of Statistics, the Shenzhen leasing price index rose for 11 months year-on-year, reaching the reasonable limit of the monitoring and early warning system. Under the pressure of soaring rents, Shenzhen will pilot the implementation of rent control on new commercial housing projects. “One year in a hurry”, rents should not increase by more than 5% year-on-year. This will be the first pilot city in the Mainland to implement rent control.

Hong Kong has completely revoked the rental control since 2004. In recent years, there have been suggestions for recovery. Will this series of information be used to revisit the old things? Will the Hong Kong Government adopt rent control to reduce the rent in response?

Protect tenants and reduce rents?

Tang Rong came to the Legislative Council Secretary Information Research Group. A 16/17 report on rent management was analyzed in detail:

What are the benefits of re-launching rent management?

. Control the actual level of rent and the increase in control rent. The rent ceiling can be set at a reasonable level to protect tenants from the sharp increase in rents during periods of shortage of housing supply.

. In respect of tenancy protection, the measures in this respect are intended to restrict the owners. Apart from some prescribed circumstances, such as arrears or the owner’s recovery of the unit, the owner cannot force the tenant to move out.

Of course, everything is positive and negative. The report also mentions that rent control may bring “expected consequences”: reducing the supply of rental housing.

Rental controls (especially rent controls) may reduce incentives and incentives for owners to rent out their flats. Some owners may change the use of their units, such as changing them to a second home, or even vacant the units concerned. This is the main statement that the official general response to the tenancy control is not appropriate.

As mentioned in the report, in terms of rental demand, the decline in rents may provide incentives for the splitting of large families into small families to live separately, or from homeowners to tenants. As the demand for rental housing increases and the number of rental units decreases, it is more difficult for those interested in renting private units to find the units that best match their financial capabilities and needs.

In the longer term, apart from the short-term impact, as the owners’ rental returns are artificially depressed, this will reduce their investment demand for housing units. This will weaken the incentives for developers to build new residential buildings during the implementation of rent control and make the rental housing long-term. Supply fell further.

In addition, the report also mentions that rental controls have had unintended effects on unregulated properties, including: under tenancy control, it is more difficult for owners to terminate leases. Some owners may choose to hire tenants more strictly, and they are interested in renting properties to high-income people with stable jobs. Owners are unable to obtain any additional rental returns from the investment in repairing buildings, and they may be left to the deterioration of their units. Even in order to mitigate the impact of rental control measures, the landlord may require tenants to pay a higher amount of deposits, miscellaneous fees for different names, overcharges to tenants (such as water and electricity), and require tenants to pay The cost of renting various types of furniture and appliances can be used to make up for the losses caused by the rent collection.

In fact, the report also went to other possible circumstances after the rent control, the property rents rose non-stop, Tang Rong believes that the probability of re-raising the lease control is quite high.