LegCo Paper No. CB(1)815/96-97
(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 Tuesday, 14 January 1997 at 10:45 a.m. in Conference Room B of the Legislative Council Building

Members present :
    Hon Albert CHAN Wai-yip (Chairman)
    Hon Ronald ARCULLI, OBE, JP
    Hon James TO Kun-sun
    Dr Hon LAW Cheung-kwok
    Hon Margaret NG
    Hon NGAN Kam-chuen
Members absent :
    Hon Howard YOUNG, JP
    Hon CHEUNG Hon-chung
    Hon Ambrose LAU Hon-chuen, JP
    Hon LO Suk-ching
Public officers attending :
    Mr C F MAK, JP
    Deputy Secretary for Planning, Environment and Lands
    Mr Esmond LEE
    Assistant Secretary for Planning, Environment and Lands
    Mr C S WONG, JP
    Acting 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

I Election of Chairman

1. Mr Albert CHAN Wai-yip was elected Chairman of the Bills Committee.

II Meeting with the Administration

2. At the invitation of the Chairman, the Deputy Secretary for Planning, Environment and Lands (DS/PEL) briefed members on the main features of the Government Rent (Assessment and Collection) Bill (the Bill). In gist, the Bill sought to implement provisions under Annex III to the Sino-British Joint Declaration (JD) relating to the requirement to charge Government rent for certain leases. The JD specifically provided that Government rent should be charged -

( i ) from 28 June 1997 for those leases in the New Territories including New Kowloon (areas to the north of Boundary Street), which would expire on 27 June 1997 had they not been extended until 30 June 2047 under the New Territories Leases (Extension) Ordinance, Cap. 150 (NTLO);

(ii) from the date of extension for non-renewable leases in the urban area (areas to the south of Boundary Street) expiring before 30 June 1997, most of which (since the entry into force of the JD) had already been extended; and

(iii) with effect from 1 July 1997, for leases granted since the entry into force of the JD.

These annual rents were equivalent to 3% of the rateable value from time to time of the land leased. The Bill codified and standardised the method of assessment, collection and payment of these rents, thereby making payment as convenient as possible. About 950,000 tenements would be subject to the liability to pay Government rent. Of these, about 60% were small residential flats with areas less than 70 square metres would pay Government rent less than $200 per month; 6% being medium sized flats with areas between 70 to 100 square metres would pay around $500 per month; and 4% being large residential flats with areas exceeding 100 square metres would pay around $1,200 per month. The Rating and Valuation Department (RVD) would be responsible for assessing and collecting Government rent. This was administratively convenient since RVD had been collecting rates from occupiers of properties for which Government rent were payable. A Government Rent Roll, containing the addresses or descriptions of tenements subject to payment of Government rent and the rateable value of such tenements would be prepared by the Commissioner of Rating and Valuation (CRV), and would be made available for public inspection. Provisions for proposals, objections, alterations and appeals to rateable value in the Government Rent Roll were similar to those under the Rating Ordinance, Cap. 116. DS/PEL hoped that the scrutiny of the Bill could be expedited so that preparatory work could be done in time for charging Government rent with effect from 28 June 1997 in accordance with the JD.

3. On the need to introduce the Bill, representatives of the Administration explained as follows-

(a) The Bill was intended to provide a mechanism for assessing and collecting Government rent payable for certain Government leases as provided under Annex III to the JD. In addition to payment arrangements, the Bill also provided for the maintenance of a Government Rent Roll and the provisions for appeal.

(b) Although the NTLO had an enabling provision for making regulations to govern the assessment and collection of Government rent, it only applied to leases in the New Territories. There was thus a need to introduce the Bill which would apply to all the leases mentioned above. It was essential to adopt a uniform and standardized approach in assessing and collecting Government rent chargeable for different types of leases. The Bill had been discussed by the Land Commission.

Liability to pay Government rent

4. Referring to provisions of the Bill which provided for the assessment of rateable values of tenements which were not subject to the payment of rates, members were concerned whether these tenements would be liable for payment of rates upon the enactment of the Bill. In response, the Commissioner of Rating and Valuation (Acting) (CRV (Atg)) explained that tenements which were exempted from rates payment under the Rating Ordinance would continue to be so exempted. These included agricultural land, churches and temples etc. However, these tenements would be liable for Government rent unless they were exempted under clause 4 of the Bill, i.e. certain rural properties owned by indigenous villagers and tsos and tongs. The exemption from liability to pay Government rent would not apply if the rural holding was not held wholly by an indigenous villager. As requested by members, the Administration agreed to provide a table comparing the exemptions from payment of rates and Government rent as provided in the Rating Ordinance and the Bill respectively.Admin.

Assessment of rateable value

5. On the assessment of rateable value for agricultural land which was not liable for payment of rates but which had been converted to illegal uses or had unauthorised structures built thereon, the Assistant Commissioner of Rating and Valuation (ACRV) explained that properties were valued as found and no enquiries made as to the status of the usage. The rateable value would be assessed by identifying their size and usage, and comparing them with the rental values of similar properties. The Administration agreed to provide members with examples to explain how the rateable value of agricultural land subject to different usages would be assessed.Admin.

6. Members also expressed concern over the collection of Government rent for unauthorised structures which might imply the lawful status of such structures. ACRV explained that clause 36 of the Bill provided that the demand for or the recovery of Government rent would not give lawful authority to the occupation of or any form of legal title to the tenement in question. In assessing rateable value, the RVD would accept the structure and its usage as it was. Where there were allegations of illegal usages or unauthorised structures, these would be referred to the relevant Government departments for action.

7. In response to a member’s concern about whether the definition of rateable value under the Bill had adequately reflected its meaning as stipulated under the Rating Ordinance, the Administration agreed to provide a paper on the matter.Admin.

Objection and appeal

8. In reply to members’ queries regarding provisions for proposals, objections, alterations and appeals relating to the assessment of rates and Government rent, CRV (Atg) made the following clarifications-

(a) The Government Rent Roll containing the addresses and descriptions of tenements and their rateable value would be prepared by CRV and made available for public inspection from late in June 1997 to 30 September 1997.

(b) If the entry in the Government Rent Roll for a tenement was not an identical tenement in the Valuation List (as in the case of tenements not liable for payment of rates), a person who was aggrieved that the tenement had been over-valued might serve a proposal to alter the Government Rent Roll under the Bill in July, August and September 1997 for the first Government Rent Roll, and in April and May each year for the subsequent Government Rent Rolls.

(c) Where the entries of tenements in the Government Rent Roll and the Valuation List were identical, any proposal on, objection to or appeal against the rateable value should be made under the Rating Ordinance only, and any consequential change to the rateable value would be made in both the Government Rent Roll and the Valuation List. Proposals to alter the rateable value in the Valuation List could be lodged in April and May in any year.

(d) Where the lessee, owner or occupier was dissatisfied with CRV’s decision regarding proposals to allow the rateable value or objection to proposed corrections, deletions or interim valuations, he might appeal to the Lands Tribunal within 28 days of the service of the notice of decision.

9. Some members pointed out that from their past experience, RVD always refused to provide appellants with the information on the basis of which rateable value were assessed. In reply, CRV (Atg) assured members that such information including the general comparisons of the rateable value of similar properties within the same district would be made available to the appellants upon request. The same would be applied to objection cases for Government rents. In any case, the appellants could lodge an appeal to the Lands Tribunal should they be aggrieved by CRV’s assessment. For members’ ease of reference, the Administration would provide a paper setting out the timetable for lodging a proposal to alter an assessment under the Rating Ordinance and the Bill.Admin.

10. As regards whether the lessee of the land or sublessee (as in tenanted premises) should be the Government rent payer, CRV (Atg) stated that over 90% of ratepayers were lessees, and it was essential for practical reasons for the Government to be able to demand Government rent from the rate payer, apart from the lessee. Where the rate payer was not the lessee, the sum so paid would be a debt due to the rate payer by the lessee unless there was prior agreement between the lessee and the rate payer requiring otherwise. A member expressed reservations in accepting the Administration’s arrangement for Government rent collection for the sake of expediency and opined that the person liable for Government rent should be the lessee. Members agreed that the issue be further examined.

11. On the Chairman’s enquiry as to the possibility of charging Government rent on a progressive basis, for example starting with 1 % of the rateable value of the land leased and gradually increasing by phases to 3%, to ease the financial burden of the owners/occupiers, DS/PEL explained that this was not possible as it would contravene the provisions of Annex III to the JD, which clearly stated that Government rent equivalent to 3% of the rateable value of the land leased should be charged. Members noted that this arrangement was already a concessionary measure as no premium would be charged for the extension of the Government leases.

12. On the title of the Bill, the Senior Assistant Law Draftsman explained that the Bill was so named as it provided for the arrangements for assessment and collection, as against imposition of Government rent which was provided in the lease documents and NTLO.Admin.

13. The Administration hoped that the Bill could be enacted before the end of March 1997 so that preparation work could be completed in time for Government rent to be charged from 28 June 1997. This preparation work included the drafting of subsidiary legislation, the gazettal of the Government Rent Roll, and the issuing of demand notes. Upon members’ request, the Administration undertook to provide a proposed legislative timetable which in its view would facilitate the implementation of the Bill.

14. Members agreed to schedule the following meetings to further examine the Bill-

(a) 22 January 1997 at 8:30 am; and

(b) 29 January 1997 at 8:30 am.

(Post-meeting note: The meeting on 22 January 1997 was rescheduled for 23 January 1997 at 4:00 pm)

15. There being no other business, the meeting closed at 12:35 pm.

Legislative Council Secretariat
31 January 1997

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