LCQ12: Renewal of land leases
In reply to a question raised by a Member of this Council on November 16 last year regarding the renewal of land leases expiring in 2047, the authorities pointed out that, for lands under single ownership, or multiple ownerships with all owners unanimously agreeing on the lease renewal arrangement, the Government will generally renew the lease through the issuing of a lease renewal document. For lands under multiple ownerships with the owners concerned failing to unanimously agree on the lease renewal arrangement, the Government will, upon the expiry of the current lease, grant a new lease to the Financial Secretary Incorporated (FSI), and FSI will, upon the reaching of a formal agreement between the Government and the registered owners of individual properties, transfer the undivided shares allocated to such properties to the registered owners concerned. Some minority owners of residential buildings under multiple ownerships have expressed worries that their rights and interests will be undermined as a result of the prolonged delay of the Government in commencing the land lease renewal procedure for their properties. They have pointed out that, in a previous case involving a private housing estate in the Southern District with land lease expiring in 2006, the minority owners concerned were greatly distressed since they only received the Government's response about the completion of the lease renewal procedure shortly before the expiry date of the land lease concerned. Regarding the renewal of land leases, will the Government inform this Council:
(1) of the following information in respect of the lands for residential use under multiple ownerships with land leases expiring between this year and 2046 (excluding those lands granted on short term tenancies): (i) the total land area, (ii) the number of lots and (iii) the number of residential units involved (including units for both commercial and residential uses), together with a tabulated breakdown by region (i.e. the four regions of the New Territories, New Kowloon, Kowloon and Hong Kong), the expiry year of the land leases and District Council district;
(2) how long before the expiry of a land lease the Government will commence the relevant work in handling lease renewal for the lands mentioned in (1), which includes but is not limited to reminding owners that their leases will soon expire, discussing with owners and handling the relevant procedure; of the factors based on which the Government decides when such work should commence; whether it will commence the relevant work ahead of the schedule for the reason that a land lease involves a large number of lots and residential units; if so, of the relevant arrangements; if not, the reasons for that;
(3) whether the conditions in the land leases to be granted by the Government to FSI and the conditions in the agreements to be entered into between FSI and individual owners will be different from the conditions in the original land leases; if so, of the criteria for determining such differences; and
(4) during the period in which a new lease has been granted to FSI, of the parties responsible for (i) managing, repairing, inspecting and maintaining the common areas and private areas of the relevant properties as well as (ii) meeting the relevant expenses thus incurred; how the assets held by the original owners' corporations (OCs) as well as the relevant contracts signed between the original OCs and the property management companies will be dealt with?
My reply to the four parts of the question is as follows:
(1) With the assistance of the Land Registry, the Lands Department (LandsD) is compiling statistics and information on the land leases expiring in or before 2047. According to the information currently available, no lease for general commercial/residential purpose involving undivided shares (i.e. the so-called multiple ownership) will expire between now and 2024. Regarding the land leases for general commercial/residential purpose expiring after 2024, the LandsD is compiling the statistics and verifying the relevant information.
(2) In general, the LandsD will accept extension application for leases not containing a right of renewal from the owner(s) concerned three years before the expiry of the lease. Depending on the complexity of the case (such as the scale of the property and the mode of ownership), the Government may consider commencing the work for lease extension earlier.
As for the specific procedures and workflow involved in the processing of lease extension, the LandsD is compiling reference materials for owners and relevant professional sectors. The work is expected to be completed by mid-2017. In addition, for land leases in respect of which the Government has decided to extend in future, the LandsD will also explore the possibility of further streamlining and shortening the workflow involved, including exploring whether it is possible to effect through legislation to streamline or dispense with the administrative formalities of executing the extension documents.
(3) Under the existing arrangements, for land under multiple ownership, if some of the owners cannot be contacted or have yet to agree on the arrangements for lease extension, the Government will grant a new lease to the Financial Secretary Incorporated (FSI) after the expiry of the current lease. The LandsD, when preparing for the issue of the new lease, will in parallel make arrangements for the FSI and the individual owners to sign an agreement, the purpose of which is for the FSI to assign the undivided shares allocated to the individual premises to the registered owners of the premises concerned. This agreement is not the extended land lease in itself. While the extended leases are largely based on the original lease terms, the Government may also consider whether to include new terms, e.g. tree conservation clauses, into the new lease having regard to the prevailing circumstances.
(4) If the Government grants the new land lease to the FSI, the responsibilities and related expenses for management, repair, inspection and maintenance, etc. of the common areas and privately-owned areas in the related estate should be governed by the applicable laws and the relevant deed of mutual covenant.
Separately, according to the information provided by the Home Affairs Bureau (HAB) / Home Affairs Department (HAD), to address future problems of continuity of owners' corporations (OCs) upon expiry and extension of land leases, the HAB / HAD, having considered the advice of the Department of Justice (DoJ) and the LandsD, for the avoidance of doubt, proposes to consider amending the relevant provisions of the Building Management Ordinance (Cap. 344), such that, notwithstanding any changes to the land lease and the deed of mutual covenant, so long as the building itself continues to exist, the OC of that building which has been existing legitimately shall continue to have perpetual succession and have the right to the exclusive possession of the common parts of the building. The HAB / HAD will further consult the DoJ on the legal aspects on the implementation of the proposed amendment.
Ends/Wednesday, March 29, 2017
Issued at HKT 14:30
Issued at HKT 14:30