LCQ4: Civil servants co-operative building society scheme

Following is a question by the Dr Hon Chiang Lai-wan and a reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (January 23):


At present, regardless of whether it is public rental housing, Home Ownership Scheme or private residential flats the supply of which is to be increased, the problem faced by the Government is how to provide the land required, and it is particularly difficult to find land in urban areas.  Yet, some retired civil servants residing in quarters developed under the civil servants co-operative housing scheme ("civil servants' quarters") have relayed to me that the plot ratio of the land lot where they are living has not been fully utilised, and it is worthy for the Urban Renewal Authority (URA) to acquire the land lot for redevelopment, so as to provide more small and medium-sized residential flats in urban areas.  It is understood that such civil servants' quarters are 40 to 50 years old.  The quarters are about five-storey high but without elevators, and there are only a few flats on each floor.  As most of the owners are elderly people, it is very difficult for them to climb up and down the stairs and they cannot afford the huge maintenance costs of their quarters.  They hope that URA can acquire their flats as early as possible, so that they can move to accommodation with better living environment.  In this connection, will the Government inform this Council:

(a)  of the total number of civil servants' cooperative building societies in Hong Kong and the total land area and estimated vacancy rate of civil servants' quarters at present, as well as the projected number of small and medium-sized flats which can be provided upon redevelopment;

(b)  whether it knows if URA will consider implementing a new pilot scheme to proactively acquire civil servants' quarters for redevelopment, so as to build more small and medium-sized residential flats; if URA will do so, of the details; if not, the reasons for that; and

(c)  whether the arrangements in respect of the land premiums paid for redevelopment projects of civil servants' quarters are different from those for redevelopment projects of other residential sites; if so, of the reasons for that; if not, whether it knows if URA will consider standardising the handling of all redevelopment projects of civil servants' quarters, so as to save the time and administrative costs required for such redevelopment?



The Civil Service Bureau is responsible for the formulation and implementation of policies on the management of the civil service.  The scope of management covers the Civil Servants Co-operative Building Society Scheme ("CBS"), which is a form of civil servants' housing benefit.  Matters relating to the modification of land lease and land premium payment are under the jurisdiction of the Lands Department (LandsD).

The CBS Scheme was launched in 1952 with the main objective of providing accommodation to the CBS members and their families.  CBSs are set up under the Co-operative Societies Ordinance and registered by the Registrar of Co-operative Societies.  Under the Scheme, eligible civil servants were granted land by the Government at a concessionary premium, usually at one-third of the full market value, to enable them to build residential buildings through co-operative societies.  The legal title of the land and the residential buildings was held by the CBS which was responsible for their management and maintenance.  Under the underlease the CBS signed with its members, CBS members have the right to use the properties but do not possess the legal titles to them.  No CBS buildings have been built since the mid-1980s.

In response to the requests from CBS members, the Government introduced a mechanism known as the "Guidelines to be followed to achieve the transfer of title to flats and land from Civil Servants' Co-operative Building Societies and Government Built Housing Schemes to their individual members and underlessees" (that is, the Surrender and Regrant Approach (SRA)), in 1987 which allowed the dissolution of CBSs and the transfer of legal titles from CBSs to individual CBS members subject to the unanimous consent of all members.  As there was considerable difficulty in achieving unanimous consent, the Government replaced SRA with the "Guidelines to be followed to achieve the transfer of title to flats and land from Civil Servants' Co-operative Building Societies to their individual members" (that is, the Modification of Lease Approach (MLA)), in 1993.  Under the MLA, a CBS may, upon obtaining the consent of 75% of its members, apply for dissolution in accordance with the procedures set out in the guidelines.  Individual members may then acquire titles to their properties and land by deeds of assignment.  The MLA guidelines were distributed to all CBSs at the time.

My reply to the three-part question is as follows:

(a)  Currently, there are 238 CBSs in Hong Kong, of which 177 have been dissolved and 61 have yet to be dissolved.  Among the 177 dissolved CBSs, 13 of them have paid the full land premium of their buildings to LandsD; and of these 13 CBSs, the buildings under 11 of them have been redeveloped (there are 164 CBSs which have yet to pay up in full the land premium of their buildings).  The buildings of these 238 CBSs occupy a total area of about 30 hectares.  As regards the vacancy position of the CBS buildings, there is a "live-in" requirement under the CBS by-law and the assignment provisions which applies to members of CBSs that have yet to be dissolved as well as to individual owners of those dissolved CBSs who have yet to pay the land premium of their properties.  In other words, these CBS members/individual owners are required to reside at the properties concerned.  As regards the properties owned by ex-CBS members who have already paid up the land premium to LandsD, we do not have information on their vacancy position.

Excluding the 11 CBSs the buildings under which have been redeveloped, if the buildings of the remaining 227 CBSs are to be redeveloped, based on the permitted plot ratio of the respective land lots, it is estimated that, at maximum, about 963 000 square metres of domestic gross floor area can be made available.

(b)  According to the Urban Renewal Strategy promulgated in February 2011, redevelopment projects undertaken by the Urban Renewal Authority (URA) may be initiated by URA itself or URA may respond to the requests of owners for redevelopment, that is, under its "demand-led" redevelopment scheme.

Regardless of whether they are URA self-initiated projects or "demand-led" projects, the first and foremost consideration of URA is whether the buildings covered by the project are in seriously dilapidated condition and whether the living conditions of residents in these buildings are poor. 

Owing to considerations of effective use of resources and the urgency of projects, the existing URA self-initiated redevelopment projects mainly cover dilapidated private buildings aged 50 years or above, in which illegal building works are commonly found and the living conditions of the residents are poor.

According to URA, if a CBS is dissolved, its ex-members may consider applying to URA for redevelopment under the "demand-led" scheme after they have acquired the legal titles to their properties.  Under the URA's "demand-led" pilot scheme, URA will identify suitable redevelopment projects from applications received based on a uniform set of assessment criteria, which include building conditions and residents' living conditions etc.

At present, URA has no intention to draw up a new pilot scheme for redeveloping CBS buildings for the time being.

(c)  As mentioned above, in response to the request of CBS members, the Government issued the MLA guidelines in 1993, allowing members of a CBS, upon obtaining the consent of 75% of members, to apply for dissolution of the society following the procedures set out in the MLA guidelines, and thereafter, to acquire the legal titles to their properties and land by assignment.

Upon acquisition of the legal titles to their properties and land, ex-members of a dissolved CBS will execute legal charge on their properties in favour of the Financial Secretary Incorporated (FSI).  The title deeds of the properties will be kept by the Government and the properties will be subject to alienation restrictions, that is, the owners are not permitted to assign, mortgage, underlet, part with possession of, or otherwise dispose of their properties, or enter into any agreement for such purposes.  To remove the alienation restriction, ex-CBS members may file an application with LandsD.  Upon payment of a land premium as determined by LandsD according to the lease conditions, the Government may approve the removal of the alienation restriction and the release of the legal charge of the relevant properties.  The title deeds will be returned to the owners, who may then dispose of their properties as they wish.  The relevant procedures include:

(1) dissolving the co-operative societies;
(2) completing the procedures for modifying government leases;
(3) vetting and approving the deeds of mutual covenant (DMC);
(4) liquidator of the CBS signing the DMC and assigning the properties to ex-CBS members by executing deeds of assignment with them; individual ex-CBS members executing legal charge on their properties in favour of FSI (that is, procedures for the ex-CBS members to obtain ownership of properties and legal titles);
(5) ex-CBS members forming an owners' corporation;
(6) individual ex-CBS members applying for the removal of the alienation restriction subject to the payment of premium.

If individual ex-CBS members encounter financial difficulties, they may apply to the Civil Service Bureau for a temporary waiver of the alienation restriction on their properties, allowing them to enter into sale and purchase agreements before payment of land premium.  Unless prior approval has been granted, ex-CBS members are not permitted to sign or enter into sale and purchase agreements with any potential buyers or developers or sell their flats before paying the land premium.

With the unanimous consent of all owners, the whole building may be demolished and redeveloped, but the redevelopment potential of the land may still be restricted by other conditions in the lease, as may be the case with other old buildings under multiple ownership.  All owners may jointly apply to LandsD for lease modification and payment of premium for the purpose of modifying the lease conditions to make use of the full potential of the land in compliance with the town planning requirements.  As regards the premium payable for the redevelopment, the amount will be determined by the difference in value of the lot before and after the lease modification, as may be the case with other properties undergoing redevelopment.

Currently, all applications for removal of the alienation restriction are centrally handled by LandsD Headquarters.  On the other hand, applications for lease modification are processed by the relevant District Lands Offices, just like other similar lease modification applications.

In Part (c) of the question, we are asked if URA would consider standardising the handling of all redevelopment of CBS buildings so as to save the time and administrative costs required for redevelopment.  As stated in the above reply to Part (b) of the question, owing to considerations of limited resources and project urgency, URA will not standardise the handling of redevelopment of CBS buildings.

Ends/Wednesday, January 23, 2013
Issued at HKT 16:11