LegCo Paper No. CB(1)951/96-97
(These minutes have been seen by the Administration)
Ref: CB1/BC/8/96

Bills Committee on Government Rent
(Assessment and Collection) Bill

Minutes of meeting held on Thursday, 23 January 1997 at 4:00 pm in Conference Room B of the Legislative Council Building

Members present :

    Hon Albert CHAN Wai-yip (Chairman)
    Hon Ronald ARCULLI, OBE, JP
    Hon Howard YOUNG, JP
    Hon Ambrose LAU Hon-chuen, JP
    Dr Hon LAW Cheung-kwok
    Hon Margaret NG
Members absent :
    Hon James TO Kun-sun
    Hon CHEUNG Hon-chung
    Hon LO Suk-ching
    Hon NGAN Kam-chuen
Public officers attending:
    Mr C F MAK, JP
    Deputy Secretary for Planning, Environment and Lands
    Mr Trevor Keen
    Principal Assistant Secretary for Planning, Environment and Lands
    Mr C S WONG, JP
    Deputy Commissioner of Rating and Valuation
    Mr F G Heath
    Assistant Commissioner of Rating and Valuation
    Mr R C Baram
    Government Land Agent/Estate Management
    Mr A N Watson-Brown
    Senior Assistant Law Draftsman
    Legal Department
Clerk in attendance :
    Miss Odelia LEUNG
    Chief Assistant Secretary (1)1
Staff in attendance :
    Ms Bernice WONG
    Assistant Legal Adviser 1
    Mrs Mary TANG
    Senior Assistant Secretary (1)2

Meeting with the Administration

(LegCo Paper No. CB(1)749/96-97)

1. Members asked the Administration to brief them on the information papers provided in response to their request at the last meeting.

Comparisons between exemptions under the Rating Ordinance (Cap. 116) and the Government Rent (Assessment and Collection) Bill

2. The Deputy Commissioner of Rating and Valuation (DCRV) took members through the table comparing the exemptions under the Rating Ordinance and the Government Rent (Assessment and Collection) Bill (the Bill).

3. The Assistant Legal Adviser 1 (ALA1) pointed out that the exemptions under the Bill would apply to rural properties held by indigenous villagers on 30 June 1984, and their lawful successors in the male line.

4. Members noted that places for public religious worships and cemeteries were exempted from assessment and payment of rates under the Rating Ordinance. These premises would be liable to Government rent unless they were exempted under clause 4 of the Bill. Members would like to know how the rateable values for these premises would be assessed, the mechanism for collecting Government rent from these premises, whether the public had been consulted and if so, their responses. Members envisaged that there might be difficulties in collecting Government rent from these premises. They were concerned in particular how the charging of Government rent on places for public religious worship would affect their operation. Members considered it necessary to launch excessive publicity on the Bill to bring home its implications to the general public.

5. In response, representatives of the Administration made the following points -

  1. The payment of Government rent in lieu of premium was a concessionary measure. Instead of charging premium as an one off lump sum payment for the extension of leases, Government rents were charged at 3% of the rateable value from time to time of the land leased in accordance with Annex III to the Sino-British Joint Declaration (JD). Since places for public religious worship and cemeteries were not exempted under the JD, they were liable to Government rent.

  2. The Rating and Valuation Department (RVD) would conduct a valuation exercise on premises for which rateable values were not available. The Administration did not think that there would be great difficulties in assessing the rateable values of cemeteries and places for public religious worship. There were acceptable ways in the United Kingdom to assess the rateable value of cemeteries on leased land. Some places for public religious worship were rental premises where rateable value could readily be assessed.

  3. The majority of churches/temples had already been granted special purpose leases. These individual new leases were private treaty grants, the terms of which had included provisions for payment of Government rent, similar to what was provided for in the Bill.

6. As regards whether the Executive Council had been duly informed of the consequences of the requirement to charge Government rent, the Principal Assistant Secretary for Planning, Environment and Lands (PAS/PEL) explained that Annex III to the JD clearly stated that Government rent was payable for applicable leases unless specifically exempted. The Administration did not have the discretion to add new classes of exemptions.

7. Members were concerned whether subvented non-Government organizations (NGO), would be liable to Government rent. DCRV stated that they would not be exempted. Under the current practices, NGO could claim reimbursements from the Government for the rates paid. He expected that the same principle would apply to Government rent.

8. Members noted that Government rent for tenements with a rateable value not exceeding the prescribed amount (currently $2,600) would be fixed at $1 per annum, if demanded. DCRV stated that this arrangement had been discussed with the Chinese side of the Land Commission and it was so made because the administrative costs for assessment and collection of Government rent for these premises would far exceed the actual value of the rent collected. Most of the agricultural land and cemeteries would probably fall under this category. Members were of the view that consideration should be given to applying the same arrangements to premises of which rentals could not be identified.Admin.

9. Members requested the Administration to provide the following information-

  1. how to assess the rateable value of cemeteries; the number of cemeteries to be affected by the Bill, and the mechanism for collecting Government rent from these cemeteries;

  2. the estimated rateable value of major churches, monasteries and temples which would be subject to the liability to pay Government rent;

  3. whether private properties bought by Government as accommodation for public servants or for other purposes were liable to Government rent;

  4. whether subvented non-Government organizations were entitled to claim reimbursements from Government for Government rent paid;

  5. whether foreign embassies were aware that their consulate premises would be liable to Government rent; and whether they have any views on this arrangement.

  6. a paper to clarify the relationship between payment of premium and Government rent; and

  7. a paper to explain the exemptions from the liability to pay Government rent as stipulated in Annex III to the JD.

Comparison between New Territories Leases (Extension) Ordinance (Cap. 150) and the Bill

10. DCRV explained that the New Territories Leases (Extension) Ordinance (NTLO) provided for extension of certain leases of land in the New Territories (including New Kowloon), while the Bill provided for the arrangements for the assessment and collection of Government rent on all applicable leases. Both the Ordinance and the Bill were intended to implement the provisions stipulated under Annex III to the JD. The Bill did not confer any additional power upon CRV. The Government’s right of re-entry to a lot if the lessee did not pay Government rent existed in present laws.

Valuation of agricultural land for Government rent purposes

11. The Assistant Commissioner of Rating and Valuation (ACRV) explained the examples in the paper as to how rateable values of agricultural land were assessed. Basically they were determined in the same manner as for other properties, i.e. an estimate of the rent at which the property might let at a designated date. The size and zonal value of the land would be taken into account. Agricultural land could be divided into three broad groups for valuation purposes, namely, vacant land; land with buildings; and land occupied for non-agricultural use. In most cases, valuation judgement was based on rental comparables.

12. Regarding the Chairman’s query about how rateable values of abandoned land would be assessed, ACRV explained that most of the abandoned land were agricultural land of which there were very little variation in land prices. Valuation was made by applying the zonal rental value to the site areas. Where the rateable values of the land were below the prescribed amount, the land would be charged at $1 per annum.

13. Referring to the ascertainment of rateable values under Section 7(2) of the Rating Ordinance, Miss Margaret NG pointed out that this section clearly stated that the rateable value of a tenement should be an amount equal to the rent at which the tenement might reasonably be expected to let, from year to year, if -

  1. the tenant undertook to pay all usual tenant’s rates and taxes; and

  2. the landlord undertook to pay the Government rent, the costs of repairs and insurance and any other expenses necessary to maintain the tenement in a state to command that rent.

She was of the view that in assessing rateable values, the assumption was made on the basis that the land would be occupied. For unoccupied land, the rateable values would be speculative, especially for those in the New Territories which had been abandoned for years for which there was no likelihood of being rented out.

14. In reply, ACRV affirmed that the rating hypothesis required the assumption of tenancy. As a valuer, rateable values had to be assessed for all tenements which were not exempted. Even for vacant land, there would still be comparable rental values upon which rateable values could be assessed.

15. The Senior Assistant Law Draftsman added that where the owner or lessee of a piece of vacant land felt aggrieved by the assessment of Government rent, he or she would have the right to lodge an objection under the provisions of the Bill.Clerk

16. Members agreed that the subject of assessment of Government rent for unoccupied land should be followed up by the LegCo Panel on Planning, Lands and Works.

Demanding Government rent from the ratepayer

17. Members appreciated that the demand for or recovery of Government rent from ratepayers would be cost effective and administratively convenient. However, they had reservations about this arrangement as they considered that the person liable to pay Government rent should be the lessee, not the ratepayer.

18. In response, the Senior Assistant Law Draftsman explained that clause 6(6) provided that where the ratepayer paid the rent but was not the lessee, the sum so paid should be a debt due to the ratepayer by the lessee unless there was prior agreement otherwise. Clause 6(7) provided that the ratepayer, if owed money by the lessee for Government rent paid, might set off the debt against any money he owed to the lessee. He could therefore deduct it from the rent payable to the lessee where he was the tenant. This would provide the tenant with a statutory right for deduction of Government rent from the rent payable.

Draft Government Rent (Assessment and Collection) Regulations

19. As members needed more time to study the draft Regulations, they agreed to examine them at a later stage.

Explanation leaflet for Government rent

20. Members noted that the explanation leaflet had been made available to the public at the press conference held for the introduction of the Bill. Members of the public might get a copy from various Government departments. A telephone hot line was set up to answer public enquiries on the Bill and as of date about 5,000 enquiries had been received.

Government rent under Crown Leases Ordinance, Cap. 40

21. DCRV explained that Government rent charged under the Crown Leases Ordinance were applicable to renewable leases and were set at fixed amounts until the properties were redeveloped upon redevelopment of the land. The rent payable under the Bill would be adjusted in step with changes in the rateable value.Admin.

22. At members’ request, the Administration agreed to provide a paper explaining the difference between the rateable values of leased land renewed under the Crown Leases Ordinance and after the commencement of the Bill.

23. Members thanked the Administration for having provided comprehensive information papers to clarify their queries. This had greatly facilitated the discussion on the Bill. Members agreed to schedule the following meetings to further examine the Bill -

  1. 30 January 1997 at 2:30 pm; and

  2. 20 February 1997 at 2:30 pm.

24. There being no other business, the meeting closed at 5:30 pm.

Legislative Council Secretariat
25 February 1997

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