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Government decides to maintain the current policy on lease modification involving private treaty grant sites

    The Government today (March 23) announced that the existing policy on lease modification to permit change of use for sites previously granted by private treaty (PTG) should be maintained after a prudent and detailed review.

     ¡§All applications for lease modification to permit change of use involving PTG sites have to undergo vigorous policy vetting and thorough and comprehensive consideration to ensure that the public interest is best served by such applications,¡¨ a government spokesman said.

     ¡§Each application for PTG will ultimately come before the Executive Council (Exco) for approval having regard to its individual merits on a case by case basis, or considered by delegated authority exercised in accordance with the approval criteria set by Exco.  We take the view that given the policy vetting and Exco as the final approving authority, there are safeguards to ensure that each PTG case approved is made in the overall public interest,¡¨ the spokesman said.

     Applications for lease modification are usually considered if the following conditions are met:

*  The former permitted use is already obsolete due to changing circumstances;
*  A change in the original land use of the PTG site is confirmed through the statutory town planning procedure for other better uses; and
*  The applicant is prepared to pay full market premium.

     ¡§If the grantee wishes to change the land use of the site, he/she has to demonstrate to the policy bureau concerned that the original use for which the land is granted has been superseded.  Moreover, it has to be confirmed through the statutory town planning process that the planning intention for the lot concerned has changed, before we will give consideration to the application.

     "The approval or otherwise of each and every case will be subject to stringent policy scrutiny and thoroughly considered on individual merits, have to be justified in the public interest, and then submitted to ExCo for consideration and approval (or where authority has been delegated by ExCo, to the Administration for consideration and approval) on a case by case basis.

     ¡§It is a long-established and time-honoured policy which provides a flexible and pragmatic way to allow owners of land granted by PTG to apply for change of land use,¡¨ the spokesman said.

     Such developments meet the pace of the development of the society and the demand for commercial and residential properties in a timely manner, and replace obsolete facilities, thereby offering a better living environment for the nearby residents and the built-up area.  They also accelerate the pace of development of our society and urban renewal. Many large-scale development projects are processed in this way.

     According to the current land policy, most government land for commercial, industrial or residential developments is sold through auction or tender. The Government disposes of land in the form of PTG through direct grant for specified purposes, only under exceptional circumstances when doing so is justified, is in line with established government policies and meets the economic, social and community needs.  

     Regarding the suggestion that for sites granted by PTG, the Government should re-enter them for open sale by auction, if the designated use has ceased or diminished, the spokesman said, ¡§Where the cessation or diminution clause in the PTGs has been demonstrably breached and relevant policy justifications for the PTG remain valid, the Administration will seek to re-enter the lot if the grantee refuses to purge the breach.  However, given the principle that private property rights should be respected, if the grantee exercises the right conferred by law to apply to the Court or petition the Chief Executive for relief against re-entry, the Government will have to wait for a long time for the relevant process to be completed.  Only under the circumstances when the petition or the application has been rejected could the site be re-possessed successfully and disposed of in the market.  

     ¡§This shows that there are potential difficulties in pursuing this course of action and the process may be protracted.  The result is that valuable land resources cannot be put to their optimal use, seriously hampering the sustainable development of Hong Kong.  This is a situation of triple loss for the land owner, the Government and the community,¡¨ he said.

     The Government has looked at two other ways of taking re-possession of land, but found neither to be practicable.

     ¡§The first way is to invoke the relevant Ordinances to resume sites granted by private treaty.  However, under the Ordinances, we have no legal power to resume the land unless this is required on grounds of public interest such as land resumption for public purpose or interference with the master layout plans, thus affecting the realisation of the planning blueprint.

     ¡§Another way is to negotiate for voluntary surrender of land by the grantee.  However, as land granted by private treaty is no different from other leased land to private owners under the law, the Government cannot take back the land without compensation.  The grantee may bargain with the Government incessantly on the surrender value involved.  The time required is unpredictable.  Of course, the grantee may also choose to refuse to surrender the land. Again, it is a situation of triple loss,¡¨ he said.

Ends/Thursday, March 23, 2006
Issued at HKT 18:36