Speech by Secretary for Housing, Planning and Lands on sites granted by private treaty

The following is the translation of the speech by the Secretary for Housing, Planning and Lands, Mr Michael Suen, on the review of lease modification to permit change of use for sites previously granted by private treaty at the Legislative Council Panel on Planning, Lands and Works meeting today (March 28):


Most Government land for commercial, industrial or residential developments are sold through auction or tender. The Government disposes of land in the form of a private treaty grant (PTG) through a direct grant for specified purposes, only under exceptional circumstances when doing so is in line with established Government policies with justifications, and meets the economic, social and community needs. We must stress that such grant is a special type of land disposal, and there are few such cases.

All sites so granted have to undergo vigorous policy vetting and thorough and comprehensive consideration to ensure that the public interest is best served by such applications. Ultimately, each application comes before the Executive Council (ExCo) for approval having regard to its individual merits on a case by case basis. We take the view that given the policy vetting and the fact that ExCo is the final approving authority, there are safeguards to ensure that each PTG case approved is made in the overall public interest.

In the past few decades, Hong Kong experienced big changes in terms of economic, social aspects and people's livelihood. As a result of economic restructuring, the continuous enhancement in the standard of living of our people and the infrastructural development of our city, the original specified purposes of some PTG sites granted in the early years have become obsolete and are no longer required. If the grantee wishes to change the land use of the site, he/she has to demonstrate to the policy bureau concerned that the original use for which the land is granted has been superseded. Moreover, it has to be confirmed that the original use of the lot concerned has undergone the statutory town planning process in changing to other uses to reflect its latest planning intention, before we will give consideration to the application. All relevant applications are required to be vetted thoroughly and submitted to ExCo for approval on a case by case basis, having regard to the public interest that it serves and the individual merits of the case. Of course, the applicant is required to pay full market premium before we formally approve the application for change of use.

It is a long-established and time-honoured policy to allow the owner of land granted by private treaty to apply for a change of land use. Many large-scale development projects such as South Horizons in Ap Lei Chau and Laguna Verde in Hung Hom, etc, are processed in this way. Such developments meet the pace of the development of our society and the demand for commercial and residential properties in a timely manner, and replace obsolete facilities such as an oil depot, power station, etc, thereby improving the living environment for the nearby residents and the built-up area. They also accelerate the pace of development of our society and urban renewal.

There has been a suggestion that for sites granted by PTG, the Government should re-enter them for open sale by auction, if the designated use has ceased or diminished. Such a suggestion involves two steps. The first is taking re-possession of the site. Where the cessation or diminution clause in the PTGs has been demonstrably breached, the Administration will strive to re-enter the lot if the grantee refuses to purge the breach. However, given the principle that private property rights should be respected, if the grantee exercises the right conferred by law to apply to the Court or petition the Chief Executive for relief against re-entry, the Government will have to wait for a long time for the relevant process to be completed, and thus we are not absolutely certain as to whether the site can be successfully re-possessed and put onto the market for disposal. For example, we decided in mid-2005 to re-enter a site used for educational purposes (a school) in Ap Lei Chau, but the grantee petitioned the Chief Executive for relief against re-entry and the case is still under processing now. This shows that there are potential difficulties in pursuing this course of action and the process may be protracted. The result is that valuable land resources cannot be put to their optimal use, seriously hampering the sustainable development of Hong Kong. This is a situation of triple loss for the land owner, the Government and the community.

We have looked at two other ways of taking re-possession of land, but found neither to be practicable. They are set out as follows:

(i) The first way is to invoke the Land Resumption Ordinance to resume sites granted by private treaty. However, under the Ordinance, we have no legal power to resume the land unless this is required on grounds of public interest such as land resumption for public purpose or undermining the realisation of the planning blueprint.

(ii) Another way is to negotiate for voluntary surrender of land by the grantee. However, as land granted by private treaty is no different from other land leased to private owners under the law, the Government cannot take back the land without compensation. The grantee would surely bargain with the Government incessantly on the surrender value involved. The time required is unpredictable. Of course, the grantee also has the right to refuse to surrender the land. Again, it is a situation of triple loss.

We have reviewed the matter thoroughly and carefully and based on the above reasons, we have decided to maintain the current policy.

My colleagues and I are happy to answer questions from Members. Thank you, Chairman.

Ends/Tuesday, March 28, 2006
Issued at HKT 18:31