Calls are growing for licensing laws to be reviewed as licensed and illegal guesthouse operators ride roughshod over the interests of building owners and tenants to cash in on the mainland visitor boom.

But district councillors concerned for residents’ rights and the Home Affairs Department’s Office of Licensing Authority, which has acknowledged an increase in illegal operations, are split.

The councillors argue the application process should involve consultation and consensus to protect residents’ rights and safety.

But the authority said it would be acting beyond its powers if it refused an application because it did not meet public consensus. The law did not empower it to refuse an application on grounds other than those related to building and fire safety regulations.

An authority spokesman said the guesthouse licence – granted when building, fire safety, health and sanitation requirements were met – did not absolve owners of the responsibility to ensure their premises complied with all lease conditions of the building.

The department said it was not considering reviewing the ordinance but vowed to step up enforcement. It said many operators had legalised their operations since receiving warnings.

Areas where illegal guesthouses are proliferating include Kowloon, Eastern District, Tsuen Wan and Wan Chai.

Mongkok district councillor Hui Tak–leung said the legislation ignored the views of residents.

The office approves applications even when the commercial use of that resident unit is restricted, Mr Hui said.

Residents are being forced to resolve the matter in a civil court. This damages the harmony of the neighbourhood. Residents often don’t have the money for legal action.

Mr Hui said that in case of accidents, guests and residents might not have proper insurance protection.

Tsim Sha Tsui district councillor Chan Kin-shing agreed.

He demanded that consultation with building owners and residents’ associations be a requirement of the licensing process.

Mr Chan said he had received a significant increase in residents’ complaints about guests causing a nuisance.

Residents have to share public facilities such as lifts with guests, while the building has to open round the clock or the password shared by many strangers, he said. They worry about the peace and order in the neighbourhood.

Last year, the department lodged 24 prosecutions against illegal operators – compared to four cases in 2003 and eight in 2002. By the end of February, three prosecutions had been lodged and 18 warnings issued.

The Tourism Board has not received any complaints from visitors regarding unlicensed hotels and guesthouses. But a spokesman warned such premises were damaging the city’s reputation because they weren’t up to standard.

The board is distributing leaflets urging individual travellers to use only licensed accommodation. Visitors can check the board’s website for a list of licensed accommodation.

Under the Hotel and Guesthouse Accommodation Ordinance, unlicensed operators face a fine of $200,000 and two years’ jail as well as a further fine of $20,000 for each day the premises operates illegally.