Sino-British negotiations on permanent residency for Hong Kong residents after the handover remain deadlocked, a source said last night. The two sides are divided over the period of time permanent residents can leave the territory for and still retain their status. According to the Basic Law, permanent residents must ordinarily reside in Hong Kong for a continuous period of not less than seven years and have taken Hong Kong as their place of permanent residence. The source said Britain had proposed permanent residents be allowed to leave Hong Kong for up to two years without forfeiting their status. However, China was insisting on the proposal put forward by the now-defunct Preliminary Working Committee, which say the limit should be one year. The source said the proposal was more lenient than the policy of the United States and Canada where six months was the time limit.