“Doomsday” Story Ungrounded

During the 2016 Legislative Council Election earlier on, some candidates made the “post-2047” topic a theme of campaign, with land lease extension after 2047 being one of the issues. However, I noticed some misconceptions and fallacies in public discussions over this topic. Allow me to explain.

One major misconception is that the HKSAR Government has no constitutional authority to deal with land lease matters after 2047; this misconception might have stemmed from misreading the relevant provisions of the Sino-British Joint Declaration (Joint Declaration). Under the Joint Declaration, from 27 May, 1985 (the date of entry into the Joint Declaration) to 30 June, 1997, the then British Hong Kong Government should formulate policies on land grants and leases according to the provisions of Annex III to the Joint Declaration. Among these, normal land grants and extension of land leases throughout the whole of the territory during that period should be made for terms expiring not later than 30 June, 2047. Therefore, stipulations in the Joint Declaration regarding the “2047” lease term are specifically for land leases granted by the British Hong Kong Government before Hong Kong’s return to China.

As for the post-handover arrangement, Article 123 of the Basic Law 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”.

On 15 July, 1997, the Executive Council endorsed various arrangements regarding land leases granted by the HKSAR Government and related matters. On the same day, the HKSAR Government promulgated a policy statement on the matter. According to the policy statement, 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 additional premium. Nevertheless, the extended leases are subject to a payment of an annual rent at three per cent rateable value of the property at that date, and the annual rent will be adjusted in step with any changes in the rateable value thereafter.

Since the establishment of the HKSAR, the Lands Department has been dealing with matters related to the extension of leases expiring after 1997 in accordance with the aforementioned policy. Pokfulam Gardens on Hong Kong Island, whose original land lease expired in mid-2006, is one of the better known examples. The land lease was granted a 50-year extension until 2056, going beyond 2047, with no additional premium charged. The owners had to pay an annual government rent equivalent to three per cent of the rateable value of the property. Furthermore, since the establishment of the HKSAR, Government land put up for public sale are generally granted for a term of 50 years from the date of sale, rather than 50 years from 1997. In other words, except for leases like short term tenancies and special purpose leases, leases of land sold or granted since the establishment of the HKSAR go beyond 2047.

The HKSAR Government has, since its establishment, been handling matters related to the extension of expiring land leases in accordance with the aforementioned policy. In general, leases extended using the original terms and conditions (excluding special purpose leases) have been granted for terms of 50 years which go beyond 2047. In considering lease extensions, various established considerations will be taken into account, including whether the land is required for a public purpose upon expiry of lease, or whether serious lease breaches are found.

The suggestion that the Government should immediately extend all leases expiring in 2047 is rather impractical. We still have some three decades to go before 2047, and extending the leases 30 years in advance actually goes against the rationale of setting a term for leases. I believe what is of critical importance is that the Government already has a policy, and that even when a large number of land leases are due to expire in 2047, the Government definitely has the experience and ability to handle the related lease extension work at the appropriate juncture in accordance with the established policy and precedents. There is no need for the public to over-worry about the uncertainties.

It is baffling that some commentators, and even members-elect of the Legislative Council, would groundlessly claim or randomly speculate that the Government would make drastic changes to the existing policy. I hope that members of the public could get the facts right.  There is no cause for worry.  I end by cautioning property owners not to believe in rumours that claim that “property titles will be automatically forfeited after 2047” and not to make decisions to sell their properties, possibly resulting in losses, based on inaccurate information.

18 September, 2016