Chan under intense pressure to scrap non-eviction plan

Financial Secretary Paul Chan Mo-po is under pressure from landlords and property developers to scrap his proposal to ban evictions or the suing of struggling tenants who cannot pay rent.

Developers were upset by the temporary law that Chan proposed in his budget on Wednesday.

That saw the Real Estate Developers Association sending a letter to authorities to explain landlords' difficulties and hoping that Chan would conduct consultations with the sector.

A source told The Standard's sister publication Sing Tao Daily that authorities have agreed to talk to developers after Chan on Saturday said the government will "continue to listen to opinions from stakeholders."

And some developers and landlords had bypassed Chan and voiced their disappointment directly to Chief Executive Carrie Lam Cheng Yuet-ngor.

The proposal is to introduce legislation that would last for three months and able to be extended for another three months if needed. It would cover unpaid rent in specific sectors affected by the fifth Covid-19 wave.

It was gazetted on Friday and awaits approval from the Executive Council and the Legislative Council. Under the proposed law landlords would be fined from HK$50,000 to three times the sum of rent owed them, according to a government source. Some 130,000 tenants would be covered by the measure.

The proposal could be challenged by the two councils, and it is possible the "rental enforcement moratorium" will not proceed.

REDA executive committee chairman Stewart Leung Chi-kin said landlords and tenants are struggling amid the pandemic, but banning landlords from going after tenants for unpaid rent would leave the burden entirely on property owners.

"If a tenant doesn't pay rent for six months and fold when they have to do so after the deadline landlords will be shouldering all the losses," he said. But "they still have to repay banks mortgage and interest."

A developer said the property industry has counter-proposed that authorities act as guarantors for tenants.

Another idea is to divide the overdue rent into three portions to be paid by the government, landlords and tenants.

Developers were willing to cut rent, it was said, but they do not want to carry the risk of losing rental revenues altogether.

Authorities have slowed handling landlords' lawsuits for unpaid rent, the source added. And some landlords were already showing leniency to tenants.

Meanwhile, Chan yesterday continued to defend his proposal.

He explained that elderly landlords who are living on rental income will get up to HK$100,000 rent prepayment from authorities amid the temporary law.

Chan also noted there were concerns the measure would disrupt operations of the commercial market. But similar measures have been introduced overseas.

Measures would be set out to assist landlords, allowing them to postpone payment of rates and repaying bank loans, he added.

And since he announced the proposed legislation some landlords have softened their stances in negotiations with tenants, he said.

Lam called for developers to give as much support to tenants as possible. Her comments came after property giant Swire on Friday announced it would waive rents for tenants that closed amid stringent social distancing measures until April 20.

Lam said premises such as fitness centers and beauty parlors would be closed for over three months to combat outbreaks.

Although the Anti-Epidemic Fund could compensate part of their losses, she said, these businesses are still in desperate need of rent waivers.