ISE10/15-16

Subject: development, indigenous villagers, housing


Overview of the Small House Policy

  • Under the Small House Policy, an indigenous male villager, who is aged 18 or above and descended through the male line from a resident in 1898 of a recognized village in the New Territories, may apply to the Lands Department once during his lifetime for permission to build for himself a small house of a regulated size3Legend symbol denoting As stipulated in the Buildings Ordinance (Application to the New Territories) Ordinance (Cap. 121), small houses must not contain more than three storeys and exceed a height of 8.23 metres, with a maximum roofed-over area not exceeding 700 sq ft. on a suitable site within his own village. The villager can apply for the small house grant in the form of either:

    (a)a building licence/land exchange. If the villager already owns private agricultural land, he can either apply for a building licence to build a small house on it at nil premium, or exchange his land with the Government at a reduced or nil premium; or

    (b)a private treaty grant. If the villager does not own any agricultural land, he can apply for a private treaty grant on government land, if available, at a concessionary premium (generally about two-thirds of the full market value).
  • In general, land suitable for building small houses is confined to areas within Village Environs ("VEs"), as well as the Village Type Development ("V") zones as stipulated in statutory town plans.4Legend symbol denoting Legislative Council Secretariat (2012). VEs refer to a 300-feet radius from the edge of the last village-type house built before the introduction of the Small House Policy in December 1972. Land within V zones is primarily intended for development of small houses by indigenous villagers. The boundaries of V zones on the statutory town plans may not necessarily coincide with those of VEs.
  • According to the Audit Commission5Legend symbol denoting See Audit Commission (2002)., the Government has imposed (a) prohibition on transfer of "ding" rights, and (b) restrictions on small house assignment to prevent indigenous villagers from cashing in on their eligibility. Under the current arrangements, the terms of the prohibition and restrictions are incorporated in the conditions of building licence, land exchange and private treaty grant.

Prohibition on transfer of "ding" rights

Restrictions on small house assignment

Issues of concern

  • Since its introduction in 1972, the Small House Policy has lent support to many indigenous villagers in improving their living environment. The Lands Department has so far approved over 40 000 small house applications. However, the implementation of the Policy has given rise to a number of concerns, as discussed in the following paragraphs.

Sustainability of the Small House Policy

Interpretation of "ding" rights under the Basic Law

Progress on the Government's review of the Small House Policy

  • In response to the release of DoA Report No. 39 in 2002, the then Secretary for Housing, Planning and Lands indicated that he intended to pursue within the tenure of his office a review of the Small House Policy and related issues in a comprehensive manner, with the hope of resolving the associated problems once and for all within that time scale. In this connection, an Inter-departmental Steering Committee was set up to look into the matters.
  • Various improvement measures have been introduced during the course of the review, including (a) streamlining the process of small house applications, (b) stipulating in the lease conditions of a small house grant that no prior arrangement for transfer or disposal of the applicant's beneficial interest is allowed (to be discussed in the next section of this paper), and (c) introducing a new set of fire safety requirements for small houses. In 2007, the Government however updated the Public Accounts Committee that the remaining issues were complex and required further deliberation within the Administration. Therefore, the comprehensive review could not be concluded within the expected time frame.
  • In response to the Public Accounts Committee's repeated enquiries on the review progress in the subsequent years, the Government reiterated that the Small House Policy involved many complicated and sensitive legal, human right, land use and planning issues, and the interests of different parties and stakeholders. The review therefore needed to be carried out prudently. More recently, the Government has again stated that it recognizes the need to review the Small House Policy in the context of prevailing land use planning as well as optimal land resource utilization.17Legend symbol denoting See GovHK (2015c). Yet, no definite timetable has been set for completing the review.

Disposal of small houses

Selling of "ding" rights

Recent developments


Prepared by Tiffany NG
Research Office
Information Services Division
Legislative Council Secretariat
28 January 2016


Endnotes:

1.According to the Government's press release issued on 29 November 1972, the new Small House Policy and practices aimed at "giving people in the rural areas an opportunity to live in decent, safe, bigger and more permanent houses with improved health standards. [The measures set out in the Policy] are interim measures which will complement the major job of producing a comprehensive plan for the development of the rural New Territories." At that time, about 60% of the buildings in the rural New Territories were temporary or unlawful houses.

2.See, for example, Legislative Council (2012), Finance Committee (2014a) and Finance Committee (2015).

3.As stipulated in the Buildings Ordinance (Application to the New Territories) Ordinance (Cap. 121), small houses must not contain more than three storeys and exceed a height of 8.23 metres, with a maximum roofed-over area not exceeding 700 sq ft.

4.Legislative Council Secretariat (2012).

5.See Audit Commission (2002).

6.The terms and conditions of the warranty clause are that "I have never entered into any arrangements or agreement with any person or persons to transfer, alienate, dispose or otherwise deal with the lot(s) or any part thereof or any interest therein or my rights in and over the lot(s), including but not limited to the right to develop the lot(s) or any part thereof (only applicable to private lots held by the applicants)", and "I have never made any arrangements to sell or otherwise dispose of my eligibility to apply for a grant of a Licence, Private Treaty Grant or Exchange of land under the Small House Policy of the Government for indigenous villagers in the New Territories". See GovHK (2015a).

7.The Certificate of Compliance is an administrative measure whereby the Lands Department confirms that all positive obligations imposed by the conditions of the small house grant have been complied with.

8.The additional premium is equivalent to the difference between the full market value of the land at the date of application to the Lands Department for removal of restriction on alienation and the premium previously paid (if any).

9.Finance Committee (2014b).

10.See GovHK (2015c).

11.See Legislative Council (2003a).

12.Faced with potentially unlimited demand for but limited supply of land for small house developments, the Government once conducted an internal examination during the Small House Policy review initiated in 2002-2003 to explore the possibility of increasing the development intensity in certain village areas. By allowing multi-storey developments, it should provide a greater number of residential units to meet demand. Yet the Government in 2012 stated that allowing multi-storey small house developments was not a solution, as it would entail planning and building-control problems, and invite extremely divergent public opinion. See Housing, Planning and Lands Bureau (2006) and GovHK (2012).

13.Legislative Council (2003b).

14.Schedule 5 to the Sex Discrimination Ordinance, enacted in 1995, provides for the exemption of any discrimination between men and women arising from the Small House Policy.

15.See Legislative Council Secretariat (1997a) and Legislative Council Secretariat (1997c).

16.In a court case relating to village representative elections (Secretary for Justice v Chan (2000) 3 HKCFAR 459, 477), a Judge of the Court of Final Appeal remarked that the rights under the Small House Policy fell within the scope of Article 40 of the Basic Law. According to Chan & Lim (2011), the case is concerned with the unrelated issue of electoral rights in the villages of the New Territories and as such, the afore-mentioned remarks are incidental which are not binding in future cases.

17.See GovHK (2015c).

18.The Tin Sum Village project was the first project introduced in 1981 under the Village Expansion Area Scheme to resume private land inside VEs for small house developments. Subsequent to the release of DoA Report No. 10 in 1987, the Lands Department introduced a three-year moratorium on removal of the restriction on alienation under the Village Expansion Area Scheme to ban the assignment of small houses in the first three years. See Audit Commission (1987).

19.See Audit Commission (2002).

20.To prevent any potential abuse of the Small House Policy, the Government had proposed to extend the moratorium restriction imposed on projects under the Village Expansion Area Scheme to all types of small house grants. However, the Heung Yee Kuk objected to the proposal.

21.In October 1997, the declaration form for small house grant application included the following clause: "I have never made and have no intention at present to make any private arrangements for my rights under the Small House Policy to be sold to other individual/a developer". See Audit Commission (2002).

22.The Court of Appeal said that "there are grounds to suspect that … agreements that were made between the parties … were illegal … there are grounds to consider that the agreements inevitably required that misrepresentations would be made to the Director of Lands through the District Land Offices as to the intention on the part of the various indigenous inhabitants to occupy the houses that were to be built". See Audit Commission (2002).

23.See Audit Commission (2002).

24.Legislative Council (2003a).

25.In October 2001, the Lands Department included the following additional clause in the declaration form: "I have never entered into any arrangements or agreement with any person or persons to transfer, alienate, dispose or otherwise deal with my rights in and over the Lot including but not limited to the right to develop the Lot pursuant to any grant or approval to be issued by the Government." See Audit Commission (2002).

26.According to DoA Report No. 39, the Lands Department would not accept the use of Power of Attorney for the execution of small house grants with effect from June 2001, except under certain exceptional circumstances such as studying abroad of the villager, where his close relatives could be appointed as his attorney. However, the Heung Yee Kuk's report indicated that the Government had agreed in 2007 to remove the restriction that only close relatives could be appointed as attorney. Based on the Lands Department's document, the small house grant document should normally be executed by the applicant in person. If the applicant wishes to execute the small house grant document by his attorney under a Power of Attorney, the use of the Power of Attorney should be subject to compliance with the requirements and conditions imposed by the District Lands Officer. See新界鄉議局(2007) and Lands Department (2014).

27.This is based on the statement of the Heung Yee Kuk published in various Chinese-newspapers on 24 December 2015.

28.See GovHK (2015a).

29.In this case, David Li Yam-pui, one of the defendants and operator of the property development company ("Developer"), recruited 22 indigenous villagers for using their names in the application for the construction of small houses in Tai Che, Sha Tin. In return, each indigenous villager received monetary rewards ranging from HK$130,000 to HK$250,000 from Li. Upon Li's instruction, a former staff of the Developer arranged for the indigenous villagers to sign sales and purchase agreements with the developer, purporting that they were the respective owners of the land lots on which they were applying for construction of small houses. However, the indigenous villagers did not actually pay for the land lots. The Court heard that the indigenous villagers also signed secret agreements with the Developer, which stated that they had agreed to transfer ownership of the small houses to the developer after the small houses were built. See Independent Commission Against Corruption (2015), and 香港特別行政區訴李欽培及其他人區域法院刑事案件2015年25號.

30.See香港特別行政區訴李欽培及其他人 區域法院刑事案件2015年25號判刑理由書.

31.See GovHK (2015a).

32.This is based on the statement of the Heung Yee Kuk published on 24 December 2015.

33.See the press release on "丁權和丁屋買賣不可混為一談" issued by the Government on 25 January 2016.


References:

1.Audit Commission. (1987) Report of the Director of Audit (No. 10) on the Accounts of the Hong Kong Government for the year ended 31 March 1987 and the results of value for money audits.

2.Audit Commission. (2002) Director of the Audit's Report No. 39. Chapter 8 - Small house grants in the New Territories.

3.Chan, Johannes & Lim, C.Y. (2011) Law of the Hong Kong Constitution.

4.Development Bureau. (2015) Replies to Legislative Council Questions at the Council meeting on 18 November 2015, LCQ1: Small House Policy.

5.Finance Committee. (2012) Examination of Estimates of Expenditure 2012-2013. Controlling Officer's Reply to Initial Written Question. Reference No. DEVEB(PL)168.

6.Finance Committee. (2014a) Examination of Estimates of Expenditure 2014-2015. Controlling Officer's Reply to Initial Written Question. Reference No. DEVB(PL)028.

7.Finance Committee. (2014b) Examination of Estimates of Expenditure 2014-2015. Controlling Officer's Reply to Initial Written Question. Reference No. DEVEB(PL)367.

8.Finance Committee. (2015) Examination of Estimates of Expenditure 2015-2016. Controlling Officer's Reply to Initial Written Question. Reference No. DEVEB(PL)047.

9.GovHK. (2012) Press Releases: Caution urged over Small House Policy, 11 January.

10.GovHK. (2013) Press Releases: Village Type Development zone, 30 October.

11.GovHK. (2015a) Press Releases: Response to whether selling rights to build small houses involves criminal offences, 7 December.

12.GovHK. (2015b) Press Releases: Small House Policy clarified, 7 December.

13.GovHK. (2015c) Press Releases: Small House Policy needs review, 18 November.

14.Hopkinson, L. & Lao, M. L. (2003) Civic Exchange. Rethinking the Small House Policy.

15.Housing, Planning and Lands Bureau. (2006) Processing of Small House Applications and Review of the Small House Policy. LC Paper No. CB(1)951/05-06(03).

16.Independent Commission Against Corruption. (2015) Press Release: Twelve jailed for fraud over construction of small houses, 4 December.

17.Lands Department. (2014) How To Apply For a Small House Grant.

18.Lao, M. L. (2013) Civic Exchange. Small House Policy II: An Update.

19.Legislative Council. (2003a) Report of the Public Accounts Committee Report No. 39. Chapter 4 - Small house grants in the New Territories.

20.Legislative Council. (2003b) Report of the Public Accounts Committee Report No. 39. Appendix 53 - Letter of 18 December 2002 from the Chairman, Heung Yee Kuk.

21.Legislative Council. (2007) Report of the Public Accounts Committee Report No. 47. Appendix 6 - Letter of 11 January 2007 from the Secretary for Housing, Planning and Lands.

22.Legislative Council. (2012) Report of the Public Accounts Committee Report No.57. Appendix 5 - Letter of 5 January 2012 from the Secretary for Development.

23.Legislative Council. (2014) Report of the Public Accounts Committee Report No.61. Part 4 - Report of the Public Accounts Committee on the Reports of the Director of Audit on the Accounts of the Government of the Hong Kong Special Administrative Region for the year ended 31 March 2013 and the Results of Value for Money Audits (Report No. 61).

24.Legislative Council Secretariat. (1997a) Bills Committee on the Equal Opportunities (Family Responsibility, Sexuality & Age) Bill, Equal Opportunities (Race) Bill, Sex and Disability Discrimination (Miscellaneous Provisions) Bill 1996 and Family Status Discrimination Bill. Minutes of the 5th Meeting held on 1 April 1997. LC Paper No. CB(2)2163/96-97.

25.Legislative Council Secretariat. (1997b) Bills Committee on the Equal Opportunities (Family Responsibility, Sexuality & Age) Bill, Equal Opportunities (Race) Bill and Sex and Disability Discrimination (Miscellaneous Provisions) Bill 1996. Minutes of the 6th Meeting held on 17 April 1997. LC Paper No. CB(2)2314/96-97.

26.Legislative Council Secretariat. (1997c) Bills Committee on the Equal Opportunities (Family Responsibility, Sexuality & Age) Bill, Equal Opportunities (Race) Bill, Sex and Disability Discrimination (Miscellaneous Provisions) Bill 1996 and Family Status Discrimination Bill. Letter from the Secretary for Home Affairs to the Clerk of the Bills Committee dated 17 April 1997. LC Paper No. CB(2)1920/96-97(01).

27.Legislative Council Secretariat. (2006) Background brief on processing of small house applications and review of small house policy. LC Paper No. CB(1)986/06-06(01).

28.Legislative Council Secretariat. (2012) Government's response to the issues raised at the meeting between Legislative Council Members and Heung Yee Kuk members on 12 January 2012 relating to review of the policy in drawing Village Environs and Village-type Development Area to resolve the difficulty of small house applications. LC Paper No. CB(1)1057/11-12(03).

29.《二零零七年新界鄉議局大事記》,新界鄉議局,2007年。

30.《二零零九年新界鄉議局大事記》,新界鄉議局,2009年。

31.《新界鄉議局聲明"關於 : 套丁是否涉及刑事欺詐?"》,《明報》,2015年12月24日。

32.《講清講楚》,電視節目,無線電視,2016年1月2日。

33.《給發展局局長陳茂波先生的公開信》,《星島日報》,2016年1月25日。

34.香港政府新聞網,新聞公報 : 丁權和丁屋買賣不可混為一談,2016年1月25日。

35.香港特別行政區訴李欽培及其他人區域法院刑事案件2015年25號。