Lands Department emphasises strict observance of government lease conditions for redeveloped industrial and/or godown lots

     The Lands Department (LandsD) today (July 22) warned a developer regarding inaccurate information on permissible uses in the marketing materials of a new development under construction on an industrial and/or godown lot in Kwai Chung.

     The marketing materials of this new development stated that the premises will be used for workshops including intelligent video conference room, studio for video recording, sound recording and live streaming, and e-sports gaming room, etc., with sports, recreational, dining, and/or co-working areas on the podium garden and individual units designed for supporting vertical living. 

     The government lease restricts the user of the subject lot to "industrial and/or godown purposes" (the Permitted User). The LandsD stresses that for leases carrying such a specific user clause, the industrial use within the lot must involve a process of manufacturing (which is unlike a modern industrial site where the lease may carry a user clause allowing a wider range of uses including non-polluting industrial uses and other uses such as art studios, design and media production permitted in the "Industrial" zones in Outline Zoning Plans); whereas godown use within the lot must involve storage of goods and/or transient deposit and storage for delivery purpose. Residential use is also not permitted. The LandsD therefore opines that those non-industrial uses as advertised in the marketing materials may not entail manufacturing or storage activities. If such non-industrial uses are eventually being carried out on the lot, it may constitute a breach of the Permitted User and the LandsD is entitled to take enforcement action against such breach. According to the LandsD, condonement of such a breach would upset the principle of level playing field in the market where many lot owners are making proper applications for a lease modification or waiver and paying additional land premium/waiver fees to allow non-industrial uses which would not have been permitted under conventional industrial leases.

     The LandsD has demanded the lot owner concerned to cease making any inaccurate or misleading misrepresentation; to immediately inform the buyers, the prospective buyers and other parties who have entered or shall enter into a sale and purchase agreement or the like with them that those non-industrial uses mentioned in their marketing materials contradict the Permitted User; and to take or to procure necessary remedial measures to rectify any breach. The lot owner has also been reminded that should they intend to use the lot deviating from the Permitted User, they must approach the LandsD for a lease modification or waiver. In the event that the application is approved, it would be subject to such terms and conditions as the Government shall deem fit including, among others, charging of a premium and an administrative fee.

     Private land owners and prospective property buyers are reminded of the need for strict observance of government lease conditions regarding the redevelopment or use of private lots. The LandsD takes a serious stance against breaches of government lease in respect of private properties and shall take lease enforcement action in respect of the breach including but not limited to the Government exercising its right of re-entry under the Government Rights (Re-entry and Vesting Remedies) Ordinance, Chapter 126.

     The users/buyers of the units of the building erected on the land should carefully study the relevant government lease conditions to ensure that their intended use of such unit shall not be in violation of the user as permitted under the government lease. They should consider seeking independent legal or other professional advice should there be doubts about the government lease conditions.

Ends/Friday, July 22, 2022
Issued at HKT 18:17