Tenants with assignment rights affected by the clearance of Tai Wo Hau Factory Estate in October will be offered ex-gratia allowances ranging from seven to 10 years' rent.

The ex-gratia allowances will be calculated at $2,717 to $5,070 per square metre. The concerned 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.

Although legal advice has confirmed that factory tenants affected by clearance have no legal rights to compensation, it is the Housing Authority's established practice to offer ex-gratia allowances to assist affected tenants.

Adequate notice given

The authority said it was not possible to compensate tenants 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.

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.

They were also offered a three-month rent-free period when leasing the authority's other factory units or a cash sum of $4,700 per unit.

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 the authority's other factory estates.

The authority will assist displaced tenants to establish businesses through restricted tender or open tender to operate trades within the scope of the authority's approved trade list for factories in the newer factory estates.

37% of units still occupied

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 the clearance announcement, over 50% of the factory units were vacant.

After the announcement, another 122 units were surrendered. At the end of March this year, there were still 158 remaining tenancies occupying 387.5 units or 37% of the total number of units, out of which 88 are in active use.

If all the affected tenants choose to take a cash lump sum in lieu of a rent-free period, the total ex-gratia allowances payable will be $41.2 million and the cash lump sum up to $2.4 million, making a total of $43.6 million.