pqsl: lease modification in hong kong

1. PQSL: Lease Modification in Hong Kong Speaker: Derek Leung

3. (A) An Introduction to Land Tenure System in Hong Kong

4. (A) An Introduction to Land Tenure System in Hong Kong 1.� Historical Background HK ceded to GB : First Anglo-Chinese Opium War (1840-42) Kowloon Peninsula (up to Boundary Street) and Stonecutter�s Island ceded to GB Convention of Peking 1860 NT & New Kowloon (North of Boundary St.): GB leased from China for 99 yrs from 1 July 1898: Second Convention of Peking in 1898

5. 2� Land Tenure System Freehold / Leasehold Freehold: St. John�s Cathedral Leasehold 1. Northern parts of Boundary Street & NT � granted not exceeding June 1997 2. Southern parts of Boundary Street & HK Islands � granted may exceed June 1997

6. 3.� NT Lease Administration � NT Leases : Group of Indian Surveyors- carry out the allocation and registration of all privately owned land NT divided into 477 Demarcation Districts (DD) for each a Block Crown Lease

7. 3.� NT Lease Administration (Cont�d) Block Crown Lease: 75 years from 1 July 1898 renewable for 24 years less last 3 days; Lot No - Description of user at that time - area of the lot - Crown rent (Old Schedule Lot); establish title and raise revenue New Grant Lot: land sold by auction subject to standard sets of conditions published from time to time in Government Gazette (14 Gazette Notifications - GN published between 1906-46)

8. 3.� NT Lease Administration (Cont�d) GN 365 of 1906: no restriction on user / site coverage, only a 2-storey height control and 24-month building covenant period GN 364 of 1934: no restriction on user, but 66% site coverage, max. limit 2-storeys � In post war era: GN conditions less frequently used as sites tendered / auctioned with own individual lease conditions.

9. (B) Lease Modification and Premium Assessment

10. (B) Lease Modification and Premium Assessment When needed Lease contain �old conditions� that may suit the situation at the time of the grant of the lease. Change of circumstances or different development needs To modify �old� lease conditions to permit more intensive developments, change of user, removal of height restrictions � which can comply with the current regulations, town planning requirements. However, they are not allowed under the current lease conditions.

11. 2. Types of modifications with examples � Full premium Modification To permit additional building / flats or floor space To permit change of the user clause To remove height restriction

12. Reduced Premium Modification New Territories Small House: modification of agricultural lots into small house lots

13. C. Empirical Premium Modification � To permit reduction of C/P requirements in zone 2 residential areas

14. D. Technical Modification � Removal of an Offensive Trade Clause Modification to permit canteen within an industrial building

15. 3. Procedures: � Only registered owners of the land or formally appointed agents can apply � Usually, the Estate Surveyor in charge would check the town planning zoning first, if the application can be entertained. If not, he will advise the applicant to proceed Section 16 application under the Town Planning Ordinance.

16. 3. Procedures: (Cont�d) DLO acts as a clearing house for all other departments for comments (Circulation for comments) DLO prepare a submission for DLC (District Land Conference)

17. 3. Procedures: (Cont�d) Terms and conditions agreed and finalized Offer subject to premium assessment (To be approved by Valuation Conference) All accepted including the premium Legal documentation

18. 4. Premium Assessment Difference between the �Before� and �After� land values Residual Valuation Method used for site value calculation�

19. 4. Premium Assessment (Cont�d) Enhancement : (1) cannot be assessed by normal valuation methods An empirical premium + Admin. Fee charged (2) modification � �Technical�, no enhancement Only admin fees charged.

20. (C) Working Examples

27. Q & A

28. Thank You