LCQ18: Land premium





Following is a question by the Hon Albert Chan and a written reply by the Secretary for Housing, Planning and Lands, Mr Michael Suen, in the Legislative Council today (July 3):




Regarding real estate developers' applications for assessment of premium and their being granted exemptions from paying land premium in respect of development projects, will the Government inform this Council:


(a) of the number of applications, made between September 2001, when suspension of sale of Home Ownership Scheme flats was announced, and June this year, by real estate developers for assessment of regrant premium in respect of development projects, and the details of each application, including the area and location of the site, as well as the assessed land premium;


(b) how the number and details of these applications compare to those of the applications made in the same period in each of the five preceding fiscal years;


(c) of the total area of green features which have been allowed, since the issuance of the Joint Practice Notes on Green and Innovative Buildings in February 2001, to be excluded from the calculation of Gross Floor Area under the Buildings Ordinance (Cap. 123), hence exempted from paying the land premium; and, in respect of each application allowed, the name of the development project, developer, type(s) of green features, area exempted, as well as the estimated land premium of the exempted area; and


(d) as it is learnt that, in calculating flat prices, some developers boost their profits from the sale of domestic flats by inflating the flats' Gross Floor Area which includes the area of some green features which have been exempted from land premium, whether the authorities have assessed the appropriateness of such practice; if the assessment finds the practice to be appropriate, of the reasons; if no assessments have been made, the reasons for that?




Madam President,


(a) During the period from September 2001 to June 2002, there were 109 applications for premium assessment processed in respect of lease modification, land exchange or lot extension for residential developments. Details of these applications are at Annex A.


(b) A comparison of the number of applications between the said period and that of the same period in the preceding five years is at Annex B.


(c) The aim of exempting green features from Gross Floor Area (GFA) calculations is to provide incentive to developers to construct buildings with better living environment for occupants. Since the issue of the Joint Practice Note on Green and Innovative Buildings in February 2001, the Buildings Department has approved 97 development projects with green features. The total GFA thus exempted under the Buildings Ordinance (Cap. 123) amounts to 114,261 square metres. Details of these projects are at Annex C. Other than their locations, the Administration does not require the names of the development projects to be submitted under the Buildings Ordinance.


Under the current land administration policy, where lease modification confers an increase in land value, premium is payable regardless of the GFA exemption under the Buildings Ordinance. There is no land premium exemption for green features, and the provisions of the Joint Practice Notes relating to green and innovative buildings have not departed from this aspect of our land administration policy. However, if there is no increase in land value arising from the green features, premium is not payable. In respect of certain green and innovative building features, such as common corridors or mail delivery rooms, no increase in land value can be identified and hence premium is not required for these features.


(d) We are aware that some developers have included certain green features in the areas of flats offered for sale. Joint Practice Note No. 2 relating to green and innovative buildings provides that such inclusion must clearly set out in the sales brochure, the use of the features and the GFA exempted. A copy of the sales brochure is required to be deposited with the Buildings Department. Property purchasers should be aware of the green features included in the property concerned, and they can make an informed choice when deciding on their purchase.



End/Wednesday, July 3, 2002