Following is a question by the Hon Abraham Shek Lai-him and a written reply by the Secretary for Development, Mrs Carrie Lam, in the Legislative Council today (March 2):
It is a common practice for consortia of owners or developers to submit applications to the Building Authority for approval of general building plans at an early stage in order to achieve certainty on what can be built upon redevelopment of old buildings under multiple ownership. However, the Building Authority introduced on October 20, 2010, a strict new measure requiring an applicant for building approval to provide particulars and documentary proof of ownership or realistic prospect of control of the land forming the site. Some owners have reflected to me that recently, the Building Authority has gone even further and disapproved building plans whenever the applicant does not already own 100% of the units in the building. These owners further pointed out that the new measures have an immediate adverse effect on owners of old buildings who are contemplating collective sales for redevelopment, as such measures create uncertainty regarding the development potential of the site and may cause the sale prices for the flats concerned to drop. In this connection, will the Government inform this Council:
(a) of the reasons and justifications for the Building Authority's introduction of the aforesaid new measure of proof of ownership, which is contrary to its previous practice, and which has not been the subject of any public or industry consultation;
(b) whether at present the Building Authority requires proof of ownership or realistic prospect of control of the land forming the site in cases involving proposed demolition and in situ redevelopment of buildings currently under multiple ownership; why ownership details are necessary or relevant to the Building Authority's decision when there is not uncertainty as to the definition of the "site" for the purpose of plot ratio and site coverage calculations;
(c) whether the Building Authority can confirm that it had not, in effect, imposed a requirement for proof of ownership of 100% of the undivided shares in the land which is the subject of any general building plan disapproved since October 21, 2010; and if it cannot, of the number of cases on which such a requirement had been imposed;
(d) how many applications for approval of general building plans had been disapproved by the Building Authority since October 21, 2010, on the ground of the applicants' failure to provide particulars and documentary proof of ownership or realistic prospect of control of the land forming the sites; and how many of these applications involved proposals in relation to buildings presently under multiple ownership to be redeveloped in situ;
(e) in cases where, since October 21, 2010, general building plans had been disapproved on the ground that an applicant could not demonstrate 100% ownership or realistic prospect of control of a building on a "site" presently under multiple ownership, of the breakdown of the percentage of the undivided shares (e.g. 30%, 50%, 80% or 90%) in the building in each case, in which the applicant could demonstrate ownership or realistic prospect of controlling; and
(f) given that there have been comments that the aforesaid strict new requirement for proof of ownership may result in lower sale prices being paid to individual owners of flats in buildings assembled for redevelopment, undermine the objectives of the Land (Compulsory Sale for Redevelopment) Ordinance (Cap. 545), and inhibit the opportunities for the much-needed increases in housing supply through urban rejuvenation, why the Government allowed the Building Authority to introduce such a requirement?
The compliance of a proposed building development with the provisions of the Buildings Ordinance (Cap. 123) (BO) has to be related to the site of the development. It has always been the Building Authority (BA)'s stance that the site of a proposed building for the purpose of the BO can only include land which the applicant owns or which he has a realistic prospect of controlling. The BA has relied on the applicant and/or his authorised person to ensure that the applicant has ownership or the realistic prospect of control of the land forming the site for a proposed building development the plans of which are submitted for approval. The BA has all along as a matter of practice, when circumstances of a case give rise to doubt, required applicants submitting building plans for approval under the BO to demonstrate their ownership or realistic prospect of control of the land forming the site. In some of these cases where the applicants could not demonstrate their ownership or realistic prospect of control, the BA had refused to give his approval to plans of the proposed building developments.
In order to step up enforcement of the above established requirement, the BA issued a circular letter to all authorised persons, registered structural engineers and registered geotechnical engineers on October 20, 2010, promulgating the requirement that applicants are to provide proof of ownership or realistic prospect of control of the land forming the site when submitting new general building plans of any proposed new building on or after October 21, 2010.
My reply to the six-part question is as follows:
(a) There has been rising public concern that some applicants who have not obtained ownership or realistic control of the land of a site might try to secure early approval of building plans from the BA. The BA therefore considers that there is a need to step up enforcement of the established requirement in respect of ownership or realistic prospect of control of the land forming the site of a proposed building development the plans of which are submitted for approval under the BO. The BA informed the industry stakeholders via the circular letter issued on October 20, 2010, of the stepped-up enforcement of the requirement. This is in line with the BA's established practice to issue guidelines or advice in the form of practice notes or circular letters to the building industry from time to time to promulgate how he applies and enforces the provisions of the BO and its subsidiary regulations.
(b) According to the BA, the requirement for submission of proof of ownership or realistic prospect of control of the land forming the site is applicable to submissions in relation to general building plans of any proposed new building, including redevelopment of an existing building under multiple ownership, on or after October 21, 2010. Without the proof of ownership or realistic prospect of control of the land forming the site, it will not be possible to establish the "site" for the proposed development/redevelopment for the purpose of the BO and its subsidiary regulations as the site can only include land which the applicant owns or which he has a realistic prospect of control. The BA will consider the submissions and the proofs on a case-by-case basis.
(c) As mentioned above, applicants are required to provide proof of ownership or proof of a realistic prospect of control of the site when submitting new general building plans of any proposed new building to the BA for approval. Since October 21, 2010, the BA has accepted cases where the applicants do not own 100% of the units in the buildings proposed for redevelopment. Examples of documents or records which have been accepted as demonstrating a realistic prospect of controlling the land forming the site include agreements for sale and purchase as well as authorisation letters signed by registered owners authorising the applicant to act on their behalf for redevelopment of the subject building.
To enhance transparency and provide industry stakeholders with past cases for reference, a Summary of Decisions of the Building Committee (BC) of the Buildings Department (BD) which scrutinises all cases concerning the proof of ownership or realistic prospect of controlling the land forming the site is uploaded onto the website of the BD for public access.
(d) and (e) Up to early February 2011, out of the 121 new building plan submissions concerning ownership issues considered by the BC of the BD, the BA has refused to accept proof of ownership or realistic prospect of control of the land forming the site in 45 cases. Among these 45 cases, 40 are reported to be under multiple ownership in which the applicants do not possess 100% ownership of the interests of the land in question. The BD does not maintain a statistical breakdown of the percentages of ownership of these cases.
(f) An owner should have acquired full ownership of the land or possessed realistic prospect of control over the land before redevelopment of the land concerned can commence. The requirement for submission of proof of ownership or realistic prospect of controlling the land forming the site when submitting building plans to the BA for approval should not affect the development potential of a particular site or the pace of development/redevelopment. The BD has also been operating an enquiry service for applicants who wish to clarify specific matters relating to interpretation of or compliance with the BO and its subsidiary regulations including those relating to the development potential of a site. The sale price of a flat or building in the property market will be determined by the owners and potential buyers taking into account various factors, including the prevailing and anticipated market condition. We do not see any direct relationship between property sale price and the requirement of proof of ownership in approval of plans.
Ends/Wednesday, March 2, 2011
Issued at HKT 14:31