Land ( Compulsory Sale for Redevelopment) Bill
Submitted by the Hong Kong Institute of Surveyors
The Hong Kong Institute of Surveyors generally agree with the spirit of the proposed legislation. However, we wish to express our views on certain points.
1. Scope of the Compulsory Sale
The Bill appears to provide a mechanism to deal with the interest in a single lot only. We purpose the Bills Committee to consider to widen the scope of the Bill to cover situations like (a) buildings which cover more than one lot and (b) schemes which cover several contiguous lots.
- Buildings cover more than one lot
For example, a building with a common staircase may be erected over two lots. For structural reasons, the whole building rather that a portion of the building on one lot has to be demolished. Sometimes, such buildings may cover several lots. In such cases 弌 building�should also be considered as a unit for compulsory sale.
- A Scheme which covers several lots
For urban renewal, it is more effective and economical to redevelop a larger site rather than a single lot. Several lots can be sold together as if they were a single lot/ property. This would also enhance the value of the lots and thus be more beneficial to all the owners. We propose the Committee to include such arrangements into the law.
2.Definition of clear majority of the shares
The percentage for the compulsory sale is reduced from 90% of the undivided shares to 80%. But this is still not effective to facilitate urban renewal in certain cases.
A lot of the buildings that need redevelopment are very old buildings which may be of three to four storeys high. We propose to redraft the clause to enable owners of clear majority shares i.e. owners who own all the shares except one outstanding share e.g. 2 shares out of 3 shares or 3 shares out of 4 shares to use this legislation to facilitate redevelopment.
3. Other interest and former owner-occupier
- Other interest in the land
People may have interest on the land which is not in the form of a share. Such interest may include inter alia easements and adverse possession rights. The proposed law should cater for the extinguishment of such rights and fair compensation for such interest.
- Allow time to vacate premises
A sub-clause should be added to allow adequate time for the former owner- occupier to vacate the premises.
- Compensation for disturbance etc.
A clause should be included to enable the former owner-occupier to recover compensation such as relocation costs and disturbance allowance from the purchaser.
4. Application of Proceeds of Sale
It is not clear when the sales proceeds are to be apportioned. It seems that these sales proceeds will be apportioned after clause 10 (2)(a) the discharge of any liability to the government and clause 10(2)(b) discharge of incumbrance.
The liability of a property may be higher than its current value, whether existing use value or redevelopment value. For example, a flat is purchased for one million dollars. The owner obtains 70% mortgage from the bank and a further 30% from a second mortgage. Say, now the flat value is reduced to 0.7 million. The flat owner may have a negative value. To use the total proceeds of sale to settle individual incumbrance means to subsidize certain property owners.
To use the total proceeds to discharge individual liability to the government and incumbrance before the apportion may not be the most appropriate method. We propose the sequence of the allocation of proceeds be rearranged.
First the proceeds of sale should be apportioned before allocation. Then it should be applied in the following sequence.
- in the discharge of any liability due to government in respect of the whole lot on pro rata basis;
- in the discharge of any individual liability due to government in respect of each individual owner;
- in the discharge of any individual incumbrance;
- in payment of residue to
- the minority owner of the lot; and
- the majority owner of the lot.
5.Valuation Report to be done by Registered Professional Surveyors
Clause 15 Schedule 1 Part 2.
To ensure the standard of the valuation, it should be specified that the valuation report must be certified by a General Practice Surveyor who must be a Registered Professional Surveyor under the Surveyors Registration Ordinance (Cap 417).
6. Reimbursement of Professional fees
To ensure that the minority owners are fairly treated, we propose that they be encouraged to employ experts such as surveyors, accountants and solicitors to help them to do the valuation and handle the case.
All professional fees, if considered reasonable, will be reimbursed to them by the majority owner who initiates the compulsory sale or the successful purchaser if he is not the majority owner. This practice is similar to compulsory land purchase conducted by the government.