Regina Ip’s proposal to cap shop rents at Hong Kong public housing estates run by Link Reit is labelled communist
- Move would undermine city’s free-market credentials and risk Hong Kong losing its crown as world’s freest economy, pro-business politicians say
Capping rent rises for shops at public housing estates would undermine Hong Kong’s status as the world’s freest economy, lawmaker Regina Ip Lau Suk-yee was warned on Monday as allies rounded on her over the controversial proposal.
The New People’s Party leader, who is also a policy adviser to Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor, on Sunday floated the idea of legislating to limit rent increases for stores in malls managed by the Link Reit, Asia’s largest real estate investment trust.
But allies and adversaries alike on Monday came out in opposition to the idea, saying it would damage the city’s free-market credentials. One pro-business politician even called it communist.
Ip said she planned to move a private member’s bill in the legislature on the subject. But only one political party, a pro-workers group, has sided with her so far, while two pro-business parties have expressed reservations. Others were non-committal.
The Link took over the running of government-owned malls and markets in 2005, and has long been accused of adopting business practices that push up rents and drive out small shopkeepers.
According to a study by the New People’s Party, rents for shop space at Link malls increased 132 per cent, from HK$25.40 to HK$58.90 per sq ft, between 2005 and 2017. The rise in the market at large was much smaller, at 72.8 per cent.
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Ip, the party’s chairwoman, said it was time to drive a change.
Although the Link is a listed corporation, the Executive Council member said the government retained the right to control rents as a matter of public interest.
She proposed capping rents with a formula that took into account property values, median monthly household income and inflation.
Ip also called for a vacancy tax on stores left empty for more than six months.
She revealed that she had not notified Lam before unveiling her plan at a press conference on Sunday.
“I think Lam would understand ... The government sold its regulatory power, so we are now trying to empower it,” Ip said.
Government approval is required to introduce a bill to the Legislative Council which “relates to public expenditure or political structure or the operation of the government”. A private member’s bill – one introduced by a legislator not acting on behalf of the executive – has to be passed by both Legco’s geographical and functional constituencies. The latter represent trades and professional sectors.
Ip acknowledged there would be difficulties gaining support from functional lawmakers, and said she hoped the government would adopt her proposal and move a government bill instead. These bills can be passed by winning backing from the majority of the 69 legislators in the house.
The Transport and Housing Bureau had been in contact and minister Frank Chan Fan would discuss the issue, Ip added.
The pro-business Liberal Party, which holds four Legco seats representing functional constituencies, said it had reservations about the idea.
“Ip has taken the moral high ground by raising an idea that for sure would win public applause,” party leader Felix Chung Kwok-pan said. “But I’m sure the city would no longer be ranked the world’s freest economy by the Heritage Foundation should the bill be passed.”
The conservative Washington-based think tank has awarded Hong Kong its crown for 25 consecutive years.
Chung added: “Regulating rent increases for one particular private listed company sounds more like a socialist or communist idea.”
Lo Wai-kwok, chairman of the Business and Professionals Alliance, raised the same concerns.
But Federation of Trade Unions lawmaker Alice Mak Mei-kuen said she would join Ip in moving the bill through Legco.
The city’s largest pro-government party, the Democratic Alliance for the Betterment and Progress of Hong Kong, said it needed more time to study the bill.
The Civic Party’s Jeremy Tam Man-ho said his organisation was open to discussing the idea, although he was concerned about the impact on the city’s economic system and the potential for legal problems.
Pro-democracy lawmakers Au Nok-hin and Eddie Chu Hoi-dick, who have long expressed concerns about the Link’s business practices, were sceptical the bill would be a solution to their worries.
A spokesman for the Link said the impact of Ip’s proposal would be far reaching as the same legal principles would be applicable to all other commercial properties in Hong Kong if the bill were passed.