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LCQ5: Compliance with land leases by The Link Management Limited

Following is a question by the Hon Lee Cheuk-yan and a reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (January 8):

Question:

It has been reported earlier that after alteration works were carried out by The Link Management Limited (The Link) in various shopping malls (including the Stanley Plaza, Cheung Fat Plaza and Lung Cheung Plaza) under its management, the floor areas of these malls have exceeded the permissible floor areas stipulated in the respective land leases. In this connection, will the Government inform this Council:

(1) given that in its reply to a question raised by a Member of this Council in February 2012, the Government advised that the District Lands Office/Hong Kong West and South was then examining the information submitted by The Link on the alteration and addition works of the Stanley Plaza and it is now almost two years since then, why the authorities have not yet released the examination results and what the latest progress of the examination is;

(2) whether it has investigated if the conversion works carried out by The Link in Cheung Fat Plaza and Lung Cheung Plaza have rendered the floor areas of these two malls to exceed the permissible floor areas stipulated in the land leases; if it has, of the details; if not, the reasons for that; and

(3) whether it has comprehensively examined whether the floor areas of various properties managed by The Link have exceeded the permissible floor areas stipulated by the land leases upon completion of alteration works; if it has, of the details and the follow-up actions the authorities had taken when they uncovered violations of the land lease conditions; if it has not, the reasons for that?

Reply:

President,

The Hong Kong Housing Authority (HA) divested its 180 commercial and car-parking facilities through the listing of The Link Real Estate Investment Trust (The Link) in November 2005. Since then, the properties of The Link have been managed by The Link Management Limited (LML). The Government and the HA do not hold any shares of The Link or LML, and are not involved in the day-to-day operation and business management of the LML.

Generally speaking, land leases involving the properties of The Link are originally granted to the HA. After the divestment mentioned above, the HA and The Link own the floor areas of commercial facilities respectively as in their respective properties in the lot. Same as the owners of other private properties, The Link, being the owner of the properties, is required to ensure the use of the properties comply with the relevant lease conditions and that any alterations comply with the requirements applicable to private property developments, including obtaining approval of building plans and consent to the commencement of building works from the Buildings Department (BD) in accordance with the Buildings Ordinance. The alteration and extension works concerned should also comply with the lease conditions, including that such works should not exceed the gross floor area (GFA) for commercial facilities permitted in the land lease.

According to the established procedures, upon receipt of building plans submitted by The Link for alteration works to be carried out in its properties from the BD or the Independent Checking Unit of the Housing Department (HD), the Lands Department (LandsD) will examine whether the works comply with the lease conditions, including whether the cap on GFA of commercial facilities as stipulated in the lease conditions has been exceeded. Where the building plans approved by the BD deviate from the lease conditions, the land owner may apply to the LandsD for approval or modification of lease conditions. LandsD will consider the application in the capacity of a landlord and may decide to approve or reject it. This include, in the case of approval, the LandsD may impose conditions such as payment of premium (if applicable).

My reply to the three parts of the question is as follows:

(1) The District Lands Office/Hong Kong West and South received the building plans submitted by The Link from the BD for alteration and extension works of the Stanley Plaza in accordance with the established procedures in September 2011, and carried out examination of the plans based on the lease conditions. However, The Link had commenced the works before obtaining approval from the District Lands Office (DLO).  Subsequently the DLO requested The Link to submit the documents concerned and justifications for the DLO to examine whether the works together with the portions owned by the HA had exceeded the original commercial floor area of the Stanley Plaza before divestment, and as a result exceeding the cap on commercial GFA under the land lease and contravening other lease conditions. The DLO had also sought legal advice, and followed up the matter by sending correspondences and meeting with The Link on a number of occasions. In a meeting in September 2013, the DLO reiterated the stance of the Government, but The Link disagreed and appealed and requested for a review. The DLO is following up this case. It is inappropriate for the Government to disclose details of the discussion at this stage to avoid compromising any action which may be taken in future.

(2) The respective District Lands Offices (DLOs) received the plans submitted by The Link from the Independent Checking Unit of the HD for alteration works of Cheung Fat Plaza and Lung Cheung Plaza in accordance with the established procedures, and carried out examination of the plans based on the lease conditions. However, The Link had commenced the works before obtaining approval from the DLOs. The DLOs are now following up according to the lease conditions. The leases concerned set out the permissible floor areas of commercial facilities in the two properties, but not specifying the floor areas of commercial facilities owned by the HA and The Link respectively. The respective DLOs have to find out whether the GFA of each of the malls after alteration together with the portions owned by the HA still comply with the total GFA before divestment, so as to ascertain whether the GFA cap stipulated in the leases has been exceeded or not. The respective DLOs had requested The Link to clarify whether the floor area declared by it included the area of commercial facilities owned by the HA, and was awaiting its reply. The DLOs also ask the HD to provide relevant information for verification.

(3) As mentioned above, LandsD examines building plans submitted by The Link for alteration works of various properties held by it according to established procedures to ensure whether the works comply with the land leases. In case any breach of the land lease conditions is detected, LandsD will seek legal advice and consider taking appropriate lease enforcement actions, including issuing warning letters. If the breaches are not rectified, the respective DLO will consider taking further actions, including re-entering the land under the Government Rights (Re-entry and Vesting Remedies) Ordinance (Cap. 126). On the other hand, if The Link applies for lease modification or applies for other approval to allow for the floor areas of the properties after alteration, the LandsD may consider the application and will impose additional conditions as appropriate such as payment of premium (if applicable).


Ends/Wednesday, January 8, 2014
Issued at HKT 15:43

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