Like other well-developed cities, Hong Kong is facing the challenge of double-ageing of its population and buildings. The Government’s strategy emphasises both rehabilitation and redevelopment. Since 2018, it has injected $19 billion to provide technical and financial support for property owners to repair their properties. However, for some old and dilapidated buildings, repair may not be cost-effective, while redevelopment is a relatively practicable option that can also address the safety hazards of these buildings. The Government introduced the Land (Compulsory Sale for Redevelopment) (Amendment) Bill 2023 (the Bill) into the Legislative Council (LegCo) in December last year (https://www.devb.gov.hk/en/issues_in_focus/legislative_council_brief/index.html). This time, I have invited a colleague from the Development Bureau (DEVB) to explain the proposal, as introduced under the Bill, to update and streamline the compulsory sale regime, as well as the establishment of a dedicated office to enhance support for minority owners affected by compulsory sale. I have also visited several owner-occupiers of old buildings recently to gauge their views and needs.

Gauging a wider spectrum of views on the proposal to update and streamline compulsory sale regime

The Government has all along been supporting and encouraging both the public and private sectors to carry out urban renewal through a policy-led and multi-pronged approach. Assistant Secretary (Urban Renewal) of the DEVB, Mr Henry WONG, says that the proposal put forward in the Bill is one of the important measures to facilitate redevelopment of old buildings and improve the living environment.

We understand that revamping the compulsory sale regime will affect private property rights, and therefore there is a need to strike a reasonable balance between expediting redevelopment of old and dilapidated buildings and protecting the property rights of minority owners. In the first half of last year, the DEVB listened to the views of the LegCo, members of the public, and stakeholder organisations and professionals of different sectors on revamping the compulsory sale regime and enhancing support for minority owners through a number of channels, including public forums and visits to the residents of old buildings.

Amendments in four directions, encompassing seven designated areas

As pointed out by Mr Henry WONG, the Bill is aimed at updating and streamlining the compulsory sale regime in four directions. The first direction is to lower the compulsory sale application thresholds. After listening to the views of stakeholders, we have proposed to lower the compulsory sale application thresholds in a target-oriented approach, with a view to channelling the limited resources and efforts of the market towards seven designated areas with a greater concentration of aged buildings and more pressing redevelopment needs (https://www.devb.gov.hk/en/issues_in_focus/legislative_council_brief/index.html#designated-areas) as covered by the respective outline zoning plans of Cheung Sha Wan (covering also Sham Shui Po), Ma Tau Kok (including Kowloon City and To Kwa Wan), Mong Kok, Sai Ying Pun and Sheung Wan, Tsuen Wan, Wan Chai, and Yau Ma Tei. The designated areas will be reviewed regularly and updated through subsidiary legislation.

Secondly, to facilitate multiple adjoining-lot compulsory sale applications; to promote consolidation of small lots for compulsory sale and redevelopment, with a view to providing more comprehensive planning and enhancing land use effectiveness, thereby enabling minority owners to benefit from higher redevelopment value arising from developments of a larger scale; thirdly, to streamline the legal process of the compulsory sale regime; and fourthly, to enhance support for minority owners affected by compulsory sale.

Property owners’ wish to expedite acquisition process for old buildings and have more comprehensive support by the government

To gauge property owners’ views on the updating and streamlining of the compulsory sale regime, I visited property owners of old buildings in Mong Kok and Sai Ying Pun earlier. Ms TAM, who lives in a building aged over 50 years in Mong Kok, supports lowering the compulsory sale application thresholds. Half a year ago, a developer approached them for acquisition of the building, but only 68% of the property owners agreed to the acquisition at that time, and the acquisition fell through because the prevailing compulsory sale application threshold of 80% could not be met. She also mentions that if the acquisition had been successful, the property owners would have had different ideas as to how to use the proceeds from the flat sale to improve their living environment. Some of them hoped to buy a flat of 30 to 40 years old with lifts and better facilities in the same district; some elderly owners hoped to rent a flat for a change, while some planned to buy a flat in Tsuen Wan.

Ms TAM also says that some property owners who did not want their flats to be acquired considered the state of the building acceptable and their flats still habitable and thus did not want to sell their flats. However, she is worried about the need of the building to get repaired from time to time and the existence of safety hazards therein despite its glossy appearance.

Elderly owners Mr and Mrs TANG, who used to live in an old building in Mong Kok, benefited from the redevelopment of the old district which took place years ago and moved to a younger building with lifts. Mr TANG recalls that he immediately signed a consent agreement to sell his flat when learning that a developer was going to acquire the building where he was living. The sale proceeds were sufficient for him to seek a newer flat with better facilities in the same district, thereby improving his life.

Mr TANG, owner of an old building in Sai Ying Pun, believes that buildings that are too old will lose their value and therefore supports expediting redevelopment of old districts. He says that the developer who approached him earlier had indicated that consent of the owners of the old buildings along the whole street would be required before the acquisition could proceed, and the acquisition eventually fell through. As seen from the case of Mr TANG, as owners usually have their own demands, it is difficult to reach a consensus, adding to the difficulties in redeveloping old buildings. We hope that, on the premise of safeguarding minority owners, we can intervene appropriately through revamping the compulsory sale regime to facilitate redevelopment of old buildings, so that owners of these buildings can move to younger buildings or buildings with lifts, thereby improving the existing living environment.

Mr CHAN, owner of an old building two streets away, also told me that a developer was interested in acquiring the building in 2018, but nothing has materialised since the developer considered the profit of the development would be small given that the building was a single-block building with a small site area. Mr CHAN says that, should a developer offer to acquire the building again, he would have no way of knowing whether the offer price is reasonable; if he does not accept the offer and thus needs to face compulsory sale, he is worried about his lack of ability to deal with the litigation. Thus, he hopes that the Government would provide support.

Setting up a dedicated office to provide one-stop enhanced support services for minority owners

Recognising that compulsory sale applications and litigation involve various procedures, we will endeavour to strengthen our support for minority owners. Mr Henry WONG says the Government has been commissioning a non-government organisation for more than 10 years to provide outreach support services for minority owners of old buildings affected by compulsory sale. The DEVB will implement two administrative measures within this year to enhance support for minority owners. Firstly, a dedicated office will be set up under the DEVB to provide one-stop enhanced support services for minority owners at different stages of compulsory sale. They include provision of legal rights and other general enquiry services, facilitation of mediation, provision of independent property valuation services, and referrals to legal and other professional services at the early stage of compulsory sale; provision of emotional counselling during the compulsory sale litigation; and assistance in searching alternative accommodation after the completion of compulsory sale. Secondly, a loan scheme with government guarantee will be set up to assist eligible minority owners in obtaining bank loans to tide over the liquidity gap arising from engaging legal and other experts to deal with the compulsory sale litigation.

The Bill will be tabled at the LegCo for First Reading on 10 January. We expect that the implementation of the measures in the Bill, coupled with other measures to facilitate redevelopment of old buildings by both the public and private sectors, could arrest the problem of ageing buildings in a multi-pronged approach, so that members of the public will be able to live a peaceful and contented life.