LDC raises tenant compensation package
THE Land Development Corporation (LDC) has reviewed the compensation paid to tenants evicted to make way for urban renewal, introducing higher cash incentives to residents willing to move out quickly without making a fuss.
Under the new policy approved by the LDC's managing board, a basic compensation offer of five times the rateable value of the property will be offered to affected tenants, or the minimum statutory requirement, whichever is greater.
A resolution amending the Landlord and Tenant (Consolidation) Ordinance, recently passed by the Legislative Council, increased the statutory compensation from 1.7 times the rateable value to one, three, five or seven times the rateable value, according to a sliding scale. As the rateable value increases, the multiplier drops.
On top of the basic rate, the LDC says it will offer incentives of an additional 30 per cent if displaced tenants reach a compensation settlement with the corporation within one month of the offer date, 20 per cent within two months or ten per cent within three months.
For instance, a tenant whose flat's rateable value was $40,000 would be entitled to compensation under the statutory requirements of seven times the first $30,000 of rateable value, giving $210,000. The remaining $10,000 would be multiplied by five times, giving an additional $50,000. The total payout would come to $260,000.
If the tenant accepts an LDC offer within one month, an additional 30 per cent incentive would be added to the basic offer, which in this case is equivalent to $78,000. That would give a total $338,000 on a flat with a $40,000 rateable value.
This could prove quite a windfall for any family unfortunate enough to have to move home.
It could also be costly for the LDC, the quasi-government body charged with breathing new life into some of Hong Kong's run down areas through redevelopment.
The LDC has had many problems in the past persuading tenants to move. Its proposed giant office/commercial redevelopment in the 'Bird Street' area of Mongkok being carried out in a joint venture with Great Eagle (Holdings), for instance, slipped years behind schedule due to problems evicting tenants.
An LDC spokesman yesterday said the corporation's new policy would ensure affected tenants would enjoy fair and reasonable compensation offers. He expected tenants to welcome the news.