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The following is issued on behalf of the Housing Authority:
Tenants with assignment rights affected by the scheduled clearance of Tai Wo Hau Factory Estate in October this year will be offered ex-gratia allowances (EGAs) ranging from seven to 10 years' rent.
Based on the EGAs calculated at $2,717 to $5,070 per square metre, these tenants will be granted allowances ranging from $56,000 to $1.7 million on delivery of vacant possession.
Tenants without assignment rights and paying market rent will receive an allowance equivalent to 15 months' rent, exclusive of rates.
ˇ§Although legal advice has confirmed that factory tenants affected by clearance have no legal rights to compensation, it is the Housing Authority (HA)'s established practice to offer EGAs to assist affected tenants to re-establish their business elsewhere, or to contribute towards the expenses of terminating the business,ˇ¨ a spokesman for the HA said.
He explained that the EGAs comprised the dual elements of disturbance (a contribution towards rental during the fitting-out period, removal, loss on value of fixtures at old premises, etc) and an amount to 'buy out' the tenants' assignment right, where applicable.
ˇ§In fact, any assignment rights held by tenants or inheritance of tenancies do not survive the termination of tenancies,ˇ¨ he said.
Referring to tenants' concern that they should be specifically compensated for loss on forced sale of stock, fixtures and fittings left ˇ§in situ,ˇ¨ goodwill and severance payments to staff, the spokesman said it was not possible to compensate them fully for losses incurred as it was not the practice of landlords to compensate tenants for their loss in the private sector provided adequate notice was given for termination of tenancies.
ˇ§Following the announcement of the Tai Wo Hau Factory Estate clearance in April last year, tenants and genuine operators were given 18 months' notice to vacate their premises by the end of October this year.
ˇ§They were also offered three months rent-free period when leasing other HA factory units or a cash sum of $4,700 per unit in lieu if they choose to forego three months rent-free,ˇ¨ the spokesman said.
A total of four restricted tender and six open tender exercises have been arranged for displaced tenants of Tai Wo Hau Factory Estate. Of the 10 tenants taking part in the restricted tender exercises, eight tenants successfully bid for vacant units in other HA factory estates.
ˇ§The HA will assist displaced tenants to establish business through restricted tender or open tender for operating trades within the scope of HA's approved trade list for factories in the newer HA factory estates,ˇ¨ the spokesman said.
Under an Early Surrender Scheme introduced in 2001, 214 tenants in Tai Wo Hau Factory Estate holding 526 units have already surrendered their premises. At the time of announcement of clearance, over 50 per cent of the factory units were vacant.
After the announcement, another 122 units were surrendered. At the end of March this year, there are still 158 remaining tenancies occupying 387.5 units or 37 per cent of the total number of units, out of which 88 are in active use.
ˇ§In case all the affected tenants choose to have Cash Lump Sum in lieu of a rent-free period, the total EGAs payable will be $41.2 million and the Cash Lump Sum up to $2.4 million, making a total of $43.6 million,ˇ¨ he said.
HA's factory estates were built to assist in clearance of Government land in the 1960s and 1970s and are now rather old and fall short of modern standards. Tai Wo Hau Factory Estate is one of the four older factory estates, ranging from 31 to 47 years old, earmarked for clearance because of rising maintenance cost and obsolete design.
Early last year, HA's Strategic Planning Committee endorsed the clearance of Tai Wo Hau Factory Estate, Kwun Tong Factory Estate, Kowloon Bay Factory Estate and Chai Wan Factory Estates in phases with the sites to be returned to the Government for other developments after clearance.
Built in 1961 to 1966, Tai Wo Hau Factory Estate comprises one four-storey block, one five-storey block and one seven-story block without lift service. It occupies an area of 1.4 hectares. There are 1035.5 factory units with standard sizes of 18 or 24 square metres.
Ends/Sunday, April 16, 2006
Issued at HKT 12:01
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