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Land Administration and Conversion Framework in Hong Kong

Explore the intricate framework of land administration in Hong Kong, covering tenure specifics, lease conditions, sales procedures, modifications, valuation assessments, conversion processes, planning regulations, and land resumption policies.

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Land Administration and Conversion Framework in Hong Kong

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  1. Land Administration and Conversion Framework in Hong Kong Tenure, Planning and Development

  2. Government Leases in Hong Kong • All land held on Government Lease • Contracts containing the following: • Tenure details • Description of lot with dimensions • Plan of the lot • Government rent • Development conditions • User conditions • Resumption clause • Government reservations e.g. rights of way

  3. Government Lease Conditions/New Grants • Contract containing the following: • User clause • Building covenants – e.g. % of GFA to be developed within specified period • Premium • Government Rent • Development clause • Non-assignment clause

  4. Land Tenure in Hong Kong 1. Old leases (pre 1 July 1997) • Urban areas of Hong Kong and Kowloon • 999 years, 99+99 years 75+75 years, 75 years • Renewable or non-renewable (b) New Territories - 99 years less last 3 days, 75 years +24 years less last 3 days (i.e. to 3 days before 1 July 1997) - now extended by statute to 30 June 2047 • New leases (since 1 July 1997) - New grants for all areas normally for term of 50 years

  5. Tenure in Hong Kong - continued • Renewable leases • new Government rent chargeable on renewal is 3% of Rateable Value • Non-renewable leases granted pre 1997 • May be extended to 2047 at Government Rent of 3% of Rateable Value • Strata title – the sale of an interest in part of a building (apartment, shop, office, floor(s), etc.) permitted and very common • Operating leases generally for 2-3 years only

  6. Land/Government Lease Disposal • All new land for development sold by auction or by tender on basis today of 50 year lease • Lump sum up front payment • Historically Government announced sales list and auction dates at beginning of financial year

  7. Land sales(continued) • Now moved to Application List and rolling 5 year sales programme • Developer applies for site and underwrites a minimum price • Government then proceeds to offer at auction

  8. Modification of Government Leases • Usually to permit more valuable user or greater intensification of use • Premium payable representing the enhancement in land value due to the modification less allowance for risk/developer’s profit • Modification can also be made by the method of Land Exchange

  9. Premium Assessments • Important valuation field in Hong Kong • Assessment by “Before and After Value” method – i.e. difference in two values of the LAND on following bases: • Value under the limitations of the existing Government Lease • Value under the provisions of the modified lease • Usually long drawn out process with land owner and Government adopting same standard approach but using very different assumptions

  10. Land Conversion Process • Original Government Lease – basic control document • Planning framework • strategic plans • zoning plans • change of use/rezoning • Impact assessments • Lease modification – premium payment • Building regulations – building plans, approvals, consents • Sales pre-consent • Certificate of compliance

  11. Land Conversion Process(continued) • Town Planning Ordinance and Building (Planning) Regulations govern planning and development process (1) Town Planning Ordinance - Outline Zoning Plans and attached Notes (Column 1 and Column 2) - need to conform to land use zoning - might control height, site coverage and Plot Ratio - statutory effect - S.16 application to Town Planning Board for Column 2 uses (but no premium if permitted under Government Lease)

  12. Land Conversion Process (continued) • Building (Planning) Regulations - Prescribe Plot Ratio computation if not already defined elsewhere - PR = Total GFA/site area • Max. PR for non-domestic – 15 • Max. PR for domestic: 8 class A site, 9 class B site, 10 class C site - Define bonus “opportunities” where GFA dedicated to public use/green features, etc - Where site abuts street less than 4.5m wide or does not abut on a street, height, site coverage and PR determined by Building Authority

  13. Administrative Policies • Density Controls • Zone 1 – high density (urban areas) • Zone 2 – medium density (residential) • Zone 3 – low density (residential) • Generally lower density in New Towns and New Territories • No statutory effect but guidelines for lease modification and land exchange

  14. Land Resumption • Land Resumption Ordinance contains basis of compensation for compulsory acquisitions by Government • Value of land resumed is defined as: • “the amount which the land if sold by a willing seller in the open market might be expected to realise” but subject to ignoring the following • Compulsory nature of sale • Any adverse planning controls • Uses not permitted under the terms of the Government Lease

  15. Land Resumption (continued) • No compensation given in respect of expectancy or probability of the grant or renewal of the Lease • Special compensation zonal rates for resumption of building and agricultural land in the New Territories

  16. Title Registration • All capital transactions registered at Land Registry • Also all leases over 5 years • Accessible to public • Very transparent and efficient market • Online access • Move from documentary evidence to title registration

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