LCQ18: Regulation of use of industrial buildings

     Following is a question by the Hon Ma Fung-kwok and a written reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (November 11):


     It has been reported that the Lands Department (LandsD) has recently taken vigorous enforcement actions against cases of industrial building units being used for purposes in breach of the uses prescribed in the land lease provisions (the breaching cases), and has even proceeded to re-enter some of those units.  Some art groups currently renting industrial building units have relayed to me that they have received warning letters from LandsD for breaching the uses prescribed in the land lease provisions, and therefore are very worried that they will eventually be required to move out of the units. In this connection, will the Government inform this Council:

(1) of the number of warning letters issued by LandsD in respect of the breaching cases last year, with a breakdown by the breach together with their percentages in the total number of such letters;

(2) of the number of cases last year in which LandsD registered the warning letters issued in respect of the breaching cases at the Land Registry (commonly known as "imposing an encumbrance"), and the number of cases in which LandsD proceeded to re-enter such units, with a breakdown by the breach;

(3) given that currently owners of industrial building units may apply to LandsD for a temporary waiver concerning changes in the use of such units, of the number of such applications received by LandsD in each of the past three years, with a breakdown by the proposed use; among these applications, of the respective numbers of cases approved and rejected by LandsD, as well as the reasons for rejection;

(4) given that as revealed by the 2014 Area Assessment of Industrial Land in the Territory published by the Planning Department in August this year, more and more economic activities and emerging industries are opting for floor space in industrial buildings, examples of which include data centres, cultural/creative art studios, etc., and those activities and industries, which are classified as "Other Uses", currently occupy about 5.1 per cent of industrial floor space and there is an upward trend in that percentage, how the authorities, in enforcing the land lease provisions in relation to industrial buildings, will at the same time have regard to promoting economic activities and developing emerging industries, so that the latter can survive in industrial buildings; and

(5) given that the Secretary for Development mentioned in his blog in August this year that the authorities would conduct a study to explore, on the premise of satisfying all fire and building safety requirements, further relaxation of the restrictions on non-industrial uses in industrial buildings, of the details of the relevant study (including the timetable for commencing the study); in the course of the study, how the authorities will take on board the views from different stakeholders (including the local art and cultural sector, the sports sector, etc.), so as to enable them to use industrial building units in a sensible, reasonable and lawful manner?



     Land leases are private contracts between the Government and the landowners. The landowners are required to ensure that the uses of land are in compliance with the lease conditions. Whether a particular use is in breach of the lease conditions cannot be generalised as it depends on the actual operation of the particular use and the relevant lease conditions of the lot. At present, the lease of most industrial buildings specifies that the lot shall not be used for purposes other than "industrial and/or godown". Under such circumstances, if an industrial building is used for other purposes, it may be in breach of lease conditions unless the owner has applied and obtained approval from the Lands Department (LandsD) for a waiver or change of the user clause, and obtained the relevant planning permission in advance where applicable.

     In general, if a breach of lease conditions is confirmed, LandsD will take appropriate lease enforcement actions, including issuing a warning letter to the owners requiring them to rectify the breach. If the breach is not rectified within a specified period, LandsD will register the warning letter at the Land Registry, commonly known as "imposing an encumbrance" and, where necessary, take further lease enforcement actions including re-entering the land or vesting the interests of the property in the Government.

     LandsD adopts the same criteria in handling cases of breach of lease conditions in industrial buildings, and has the responsibility to follow up on such cases. When handling situations involving lease breaches, LandsD allows a certain degree of flexibility where practicable, for example, warning letters are issued in advance and grace periods are allowed before imposing an encumbrance. The more stringent measure of vesting will only be resorted to where necessary. However, if it is found that the use in question not only breaches the lease conditions, but also poses greater safety risks, such as cases involving a higher flow of people (particularly elderly persons and children) in the concerned industrial building, it is necessary for LandsD to step up enforcement actions, including requiring the owner to rectify the breach within a short period of time. If the owner fails to do so, LandsD will take prompt and decisive action, including re-entry or vesting.

     My reply to the five parts of the question is as follows:

(1) In 2014, there were a total of 209 cases which LandsD had issued warning letters to owners of industrial buildings for breach of uses specified in the land lease. The cases included operation of offices, interest classes, workshops, planting activities, showrooms, health centres, property agencies and shops, etc. LandsD does not have statistics showing the breakdown of the use of the relevant cases of lease breaches.

(2) In 2014, there were a total of 105 cases which LandsD had sent warning letters to the Land Registry for registration because of the owners' failure to rectify the uses in industrial buildings that were in breach of lease conditions upon expiry of the warning letters. The cases included operation of offices, interest classes, workshops, planting activities, showrooms, health centres, property agencies and shops etc. LandsD does not have statistics showing the breakdown of the use of the relevant cases of lease breaches. In the same year, there was no case of property vested in the Government for breach of uses in industrial buildings.

(3) Owners intending to use their premises in industrial buildings for uses other than those permitted under the lease have to apply to the respective District Lands Office (DLO) of LandsD for temporary waiver permitting the intended use. In processing the applications, DLO will consult the relevant departments including the Planning Department (PlanD) and the Fire Services Department, and conduct local consultation through the District Offices where necessary. Generally speaking, the relevant departments will pay attention to whether the intended uses comply with the permitted uses in the outline zoning plans (OZP) and the relevant Ordinances and criteria, including the Fire Services Ordinance (Cap. 95) and its related criteria, so as to ensure compliance with statutory requirements and protection of public safety. Amongst other things, if the intended use does not comply with the requirements of the OZP, DLO will not consider the waiver application. Depending on the comments received from the relevant government departments, DLO will, in the capacity of the landlord, consider whether to issue a waiver to approve the use. If the application is approved, the applicant will have to pay a waiver fee and an administrative fee, and accept other terms stipulated in the waiver.

     LandsD does not compile statistics on a regular basis for cases of application for temporary waiver in industrial buildings. However, LandsD conducted a one-off survey in end-February 2015. It was found that there were approximately 1 000 valid temporary waivers applicable to premises in industrial buildings.

     Moreover, the measures to revitalise industrial buildings have been implemented since April 1, 2010 and the application period will remain open until March 31, 2016. As at end-October 2015, LandsD received a total of 153 applications for special waivers for wholesale conversion of industrial buildings under the measures, of which 97 cases have been approved. The proposed new uses of the approved applications are mainly hotels, offices, eating places, as well as shops and services, where 25 cases are allowed to be used for "place of recreation, sports or culture".

(4) and (5) The 2014 Area Assessments of Industrial Land in the Territory revealed that there has been an increasing trend for "Other Uses" that are non-industrial in nature in existing industrial buildings, such as cultural and creative art studio and data centre, etc. The study recommended that, without compromising fire and building safety requirements, feasibility of further allowing flexibility for non-industrial uses could be explored.

     PlanD has completed the review related to "Art Studio" use and proposed that operation of "Art Studio (excluding those involving direct provision of services or goods)" be allowed in existing industrial buildings. Concerned departments have consulted relevant stakeholders including Sub-committee on Visual Arts of the Advisory Committee on Arts Development on the proposal, which was generally supported by the stakeholders. Since early 2015, the Town Planning Board has already made corresponding amendments to Sha Tin, Ma Tau Kok and Tsing Yi OZPs to incorporate the proposal. Similar amendments will also be made to other OZPs when opportunity arises.

     At the same time, PlanD is now consulting concerned departments on the operation requirements and technical feasibility of accommodating some emerging industries (e.g. hydroponics and aquaculture) in industrial buildings, so as to explore whether such uses can satisfy all fire and building safety requirements, and be allowed to operate in industrial buildings. Consultation will be conducted by concerned departments in due course.

Ends/Wednesday, November 11, 2015
Issued at HKT 14:32