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LCQ5: Renewal of land leases expiring in 2047

Following is a question by the Hon Tanya Chan and a reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (November 16):

Question:

According to Article 7 of the Basic Law (BL), "the land and natural resources within the Hong Kong Special Administrative Region shall be State property. The Government of the Hong Kong Special Administrative Region shall be responsible for their management, use and development and for their lease or grant to individuals, legal persons or organizations for use or development. The revenues derived therefrom shall be exclusively at the disposal of the government of the Region." Moreover, Article 123 of BL stipulates that, "where leases of land without a right of renewal expire after the establishment of the Hong Kong Special Administrative Region, they shall be dealt with in accordance with laws and policies formulated by the Region on its own." It has been reported that a large number of existing land leases in Hong Kong will expire in 2047. The Secretary for Development (SDEV) stated earlier that the Government would find a "smart method" to deal with the renewal of such leases. In this connection, will the Government inform this Council:

(1) of the information on the lands within Hong Kong the leases of which will expire in 2047, including the districts in which they are located, their total area and the number of lots, together with a breakdown by type of buildings on such lands;

(2) of the details of the "smart method" mentioned by SDEV; whether the Government has drawn up any policy, specific work plan and timetable to deal with the renewal of land leases expiring in 2047; if it has, of the details; if not, the reasons why the Government has not yet commenced the relevant work, and when it will commence such work; and

(3) whether it will conduct any form of public consultation on the legislation and policy involved in the renewal of land leases; if it will, of the detailed work plan and timetable; if not, the reasons for that?

Reply:

President,

The Hong Kong Special Administrative Region (HKSAR) Government has clear and definite policy for handling matters related to the extension of land leases upon expiry.

According to the policy statement promulgated by the HKSAR Government in July 1997, leases not containing a right of renewal (excluding short term tenancies and special purpose leases) may, upon expiry and at the sole discretion of the HKSAR Government, be extended for a term of 50 years without payment of an additional premium. Nevertheless, the extended leases are subject to a payment of an annual rent at 3 per cent ratable value of the property, the annual rent will be adjusted in step with any changes in the ratable value thereafter.
     
Since the establishment of the HKSAR, the Lands Department (LandsD) has been dealing with matters related to the extension of leases in accordance with the aforementioned policy. Various factors will be considered on lease extension, e.g. whether serious breaches are found under the original lease; if the original lease was granted on policy considerations for promoting certain objectives (e.g. development of an individual industry), whether the policy consideration is still valid.

As a matter of fact, since the above policy came into effect in July 1997, setting aside leases granted for special purposes on policy considerations, most leases not containing a right of renewal have been extended.

My reply to the Hon Chan's questions about the arrangements for extension of land leases expiring in 2047 is as follows:

(1) According to the speech by the then Secretary for Lands and Works at the Legislative Council on May 6, 1987, at the time of tabling the New Territories Leases (Extension) Bill 1987 at the Legislative Council, there were over 30 000 land leases in the New Territories (including New Kowloon), and the New Territories Leases (Extension) Ordinance (Cap. 150) provided for the automatic extension of those land leases to 2047.
 
At present, the LandsD does not have readily available information on all land leases expiring in 2047. That said, the LandsD has recently commenced work in this regard, including seeking the Land Registry's assistance, with the aim of compiling and maintaining information on relevant land leases to facilitate making preparations and arrangements for the extension of the leases concerned.

(2) and (3) On the policy level, as I have said earlier, the Government has a clear and definite policy to deal with matters related to the extension of land leases upon expiry.

As regards the execution, the LandsD currently extends the land leases through the following means depending on the mode of ownership of the land concerned:
 
(i) For land under single ownership, or multiple ownership with all owners unanimously agreeing to the lease extension arrangement: the lease will generally be extended through the issuing of a lease extension document on which the Government and all owners must execute.

(ii) For land under multiple ownership but owners not unanimously agreeing on or having difficulties in unanimously agreeing on the arrangement for lease extension (e.g. residential buildings with alienated units): after the expiry of the current lease, the Government will grant a new lease to the Financial Secretary Incorporated, which will assign the undivided shares allocated to the individual premises to the registered owners of the premises concerned after the Government and the registered owners of the individual premises have reached a formal agreement. This will ensure that even if individual owners do not agree with or cannot execute the lease extension arrangement, the interests of other owners will not be affected.

The Government has no plan to change the existing policy and does not see the need of so doing.

The execution of lease extension requires manpower and time, and advance preparation is needed for dealing with a large number of existing leases expiring at the same time on June 30, 2047. Back then, the Government extended most of the land leases expiring before June 30, 1997 in the New Territories (including New Kowloon) to June 30, 2047 through the legislation of the New Territories Leases (Extension) Ordinance (Cap. 150). The aforementioned ordinance was enacted in 1988, which was about nine years before the leases expired in 1997. In considering the execution arrangements for the extension of leases expiring on June 30, 2047, we will make reference to our past experience in legislation. There are still 30 years to go before 2047. We are now actively compiling the relevant information, but based on the information currently available, no lease for general commercial/residential purpose will expire between now and 2024.  Hence, we have sufficient time to make preparations. We will make arrangements to deal with the lease extension work at an appropriate juncture.

If the Government extends a large number of leases expiring at the same time in one-go by way of legislation, the relevant legislative proposal will be submitted to the Legislative Council for consideration in accordance with procedures.

As for the specific procedures and workflow involved in the processing of lease extension, the LandsD is making reference to the past experience in handling lease extensions with a view to compiling reference materials. During the process, the LandsD will communicate with the relevant professional sectors and other stakeholders as well as explore the possibility of streamlining the procedures involved. The work is expected to be completed in mid-2017, after which the reference materials will be made available to the public for reference. 

Lastly, I would like to reiterate that since the establishment of the HKSAR Government, the Government has been dealing with matters related to the extension of land leases upon expiry in accordance with the said policy. Leases extended in original terms and conditions (excluding short term tenancies and special purpose leases) have been extended without payment of additional premium but subject to payment of an annual rent.  The amount is at 3 per cent ratable value of the property, and will be adjusted in step with any changes in the ratable value thereafter. The Government's policy is clear and definite and the relevant sectors have a clear understanding on the matter. There should be no cause for concern to the public, nor should members of the public sell their properties in panic under the influence of groundless speculations or one-sided commentaries.
 

Ends/Wednesday, November 16, 2016
Issued at HKT 14:21

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