ISE07/16-17

Subject: development, land administration, land tenure, land lease


  • According to the Government, there are at least 30 000 land leases in the New Territories (including New Kowloon) which are made for terms expiring by around mid-2047.1Legend symbol denoting See GovHK (2016b). In the more recent months, there have been public concerns over whether the Government has the power, and if so how, to extend land leases approaching expiry at mid-2047, as the uncertainty in land tenure might in turn have implications for property transferability and mortgage financing in the medium to the longer term.
  • This issue of Essentials briefly reviews the historical development of land tenure in Hong Kong, followed by a discussion of issues of concern for land leases expiring in 2047.

Historical development of land tenure system before 1997

  • In Hong Kong, virtually all land is leasehold, except a small plot of land granted to St John's Cathedral in Central.2Legend symbol denoting The land for St John's Cathedral was granted freehold in 1847 with perpetual ownership under the condition that the land was used as a church. See Goo (2010). Since 1843, it had been an established practice for the Government to dispose of land by granting leases to users with terms mostly either 75 years or 99 years, and in limited cases, 999 years. This leasehold system stays broadly unchanged after reunification with the Mainland, with leases granted before mid-1997 known as Crown leases and thereafter as Government leases.
  • By and large, land leases in Hong Kong before reunification in 1997 have the following common periods of duration, mostly for duration of 75 or 99 years:

    (a)Lease term of 75 years: When the Hong Kong Island was ceded to the British government in 1842, it was the initial practice for the former colonial government to grant 75-year leases, in accordance with the instructions from the British government. This practice carried on after cession of Kowloon on the south of the Boundary Street in 1860.

    (b)Lease term of 99 years: When the New Territories and New Kowloon at the north of the Boundary Street were leased to the British government for a period of 99 years in 1898, the former colonial government began to grant land leases of 99 years less three days to users. This lease duration was later applied to other parts of Hong Kong as well.

    (c)Lease term of 999 years: Lease term of 999 years is more like an exception than an established practice. During 1849-1898, land leases could be made to last for 999 years upon application of landowners. Yet the former colonial government ceased to offer such long leases after May 1898, as it deprived government control of land and potential land revenue in the longer term. At present, only a few pieces of land on the Hong Kong Island and Kowloon are with the lease term of 999 years.3Legend symbol denoting The residential development at Taikoo Shing is one example of the lands with lease term of 999 years. See Swire Properties Limited (2011).
  • Under the Government Leases Ordinance (Cap. 40) enacted in 1973, all renewable land leases in Hong Kong are required to pay a re-assessed annual rent equivalent to 3% of rateable value of the land concerned upon renewal. This has implications for the land lease extension and renewal in the coming years.
  • In the early 1980s, there were widespread concerns over the uncertainty over land leases in Hong Kong, as the lease term of the land in the New Territories was approaching towards expiry in 1997. This uncertainty was subsequently removed upon signing the Sino-British Joint Declaration in December 1984. Not only does the Joint Declaration make it clear that the sovereignty over the whole of Hong Kong would be returned to China on 1 July 1997, it also states that land leases in Hong Kong and other related matters would be dealt with in accordance with the provisions of its Annex III. In gist, land matters would be dealt with under the following principles:4Legend symbol denoting See Goo (2014) for a brief summary of the land lease issues of the Joint Declaration and the Constitutional and Mainland Affairs Bureau (2007) for its original text.

    (a)all leases, including rights of renewal extending beyond 30 June 1997 are allowed to continue;

    (b)all leases in the New Territories that expired before 30 June 1997 may be extended for a further fifty years until 30 June 2047;5Legend symbol denoting This is governed by the New Territories Leases (Extension) Ordinance (Cap. 150) enacted in 1988 to extend the lease term of eligible land in the New Territories to 2047, without payment of any additional premium.

    (c)all leases on Hong Kong Island and in Kowloon that expired before 30 June 1997 without an option to renew could be renewed by the Crown at an annual rent equivalent to 3% of the rateable value without additional premium; and

    (d)new leases of land may be granted for terms expiring not later than 30 June 2047.

Land administration policy over land lease beyond 2047


Prepared by Angela CHOI
Research Office
Information Services Division
Legislative Council Secretariat
8 December 2016


Endnotes:

1.See GovHK (2016b).

2.The land for St John's Cathedral was granted freehold in 1847 with perpetual ownership under the condition that the land was used as a church. See Goo (2010).

3.The residential development at Taikoo Shing is one example of the lands with lease term of 999 years. See Swire Properties Limited (2011).

4.See Goo (2014) for a brief summary of the land lease issues of the Joint Declaration and the Constitutional and Mainland Affairs Bureau (2007) for its original text.

5.This is governed by the New Territories Leases (Extension) Ordinance (Cap. 150) enacted in 1988 to extend the lease term of eligible land in the New Territories to 2047, without payment of any additional premium.

6.Article 7 of the Basic Law stipulates that "[t]he land and natural resources within the Hong Kong Special Administrative Region shall be State property. The Government of the Hong Kong Special Administrative Region shall be responsible for their management, use and development and for their lease or grant to individuals, legal persons or organizations for use or development. The revenues derived therefrom shall be exclusively at the disposal of the government of the Region."

7.Short term tenancies are normally granted for a term of not more than five years and thereafter monthly or quarterly. Leases for special purposes include leases for recreational purposes and petrol filling stations usually with a term of 21 years.

8.See GovHK (2016a).

9.See Development Bureau (2016).

10.See 沙田區議會2015年 and 2016年. The land lease of the Sha Tin Racecourse was expired in 2012 and then renewed by short-term extensions. In June 2016, the Government approved a 50-year special purpose lease. One of the lease conditions is that The Hong Kong Jockey Club is responsible for the provision and management of recreational facilities in the Penfold Park (located in the racecourse) for public use.

11.See Ejinsight (2016).

12.See GovHK (2016b).

13.See GovHK (2016b).

14.See《明報》, 2016年10月29日.

15.See GovHK (2016b).


References:

1.Constitutional and Mainland Affairs Bureau. (2007) The Joint Declaration.

2.Daily Information Bulletin. (1997) HKSAR land policy and first Land Disposal Programme announced, 15 July 1997.

3.Development Bureau. (2016) "Doomsday" Story Ungrounded.

4.Ejinsight. (2016) Land lease: It's not too soon to fret over 2047, 15 September 2016.

5.Gittings, D. (2011) What will Happen to Hong Kong after 2047? California Western International Law Journal, vol. 42, no. 1, pp. 37-60.

6.Gittings, D. (2013) Introduction to the Hong Kong Basic Law.

7.Goo, S. H. & Lee, A. (2010) Land Law in Hong Kong.

8.Goo, S. H. (2014) An overview of Hong Kong land law and dispute resolution, Resolving Land Disputes in East Asia.

9.GovHK. (2016a) LandsD's response to media enquiries on land leases expiring in 2047, 13 September 2016.

10.GovHK. (2016b) Renewal of land leases expiring in 2047, 16 November 2016.

11.Hong Kong Monetary Authority. (2012) Prudential Measures for Property Mortgage Loans, 14 September 2012.

12.Nissim, R. (2012) Land Administration and Practice in Hong Kong.

13.Swire Properties. (2011) Swire Properties Limited: Listing by Introduction of the Main Board of The Stock Exchange of Hong Kong Limited.

14.《2047年地契問題 金管局:銀行毋須調整按揭政策》,《明報》,2016年10月29日。

15.《銀行促港府釐清2047地契問題》,《明報》,2016年10月15日。

16.沙田區議會:《發展及房屋委員會》,2015年4月30日。

17.沙田區議會:《發展及房屋委員會》,2016年11月3日。

18.香港測量師學會:《香港測量師學會回應「2047年到期的土地契約」問題》,2016年10月7日。