Streamlined arrangements in granting approval or consent under Government leases in Hong Kong were announced by the Lands Department (LandsD) on 31 December 2021.
The long-awaited cutting of red tape is notified in LandsD Practice Notice (No. 4/2021), which we summarise for interested parties here in this latest Legal Update.
The long-established principle in Hong Kong is that land premium may be charged by Government if requisite approval/consent granted under lease would result in enhancement in development potential or value of the land.
- Situation 1: If approval/consent is obtained pursuant to relevant clauses of the Government lease and does not involve relaxation of lease requirements or restrictions, no premium will be charged.
- A list of clauses involving this situation is set out in Part (I) of Appendix A to the Practice Note. Examples: design & disposition/ design, disposition & height (DD/DDH), deposit of car park layout plan, landscaping, tree preservation, recreational facilities, office accommodation for watchmen, etc.
- Situation 2: If approval/consent is pursuant to relevant clauses of the Government lease and does involve relaxation of lease requirements or restrictions, the Director of Lands may exercise absolute discretion under lease to grant, not to grant or grant it on terms and conditions he deems fit, including charging premium if such approval/ consent would result in enhanced development potential or value of the land.
New streamlined arrangements
Q1: Whether premium is chargeable?
Taking the initiative to review situations where it is less clear whether a premium may be charged, LandsD has compiled the following lists of typical situations under which premium may/ may not be charged:-
- Part (II) of Appendix A sets out a list of clauses where premium will generally not be charged, on the precondition that the lot owner’s proposed application is acceptable to the concerned bureau and/or department. Examples: variation/ widening of vehicular access points, noise barrier erection projecting beyond lot boundary, building separation, variation of number/ dimension of parking spaces for disabled persons, etc.
- Appendix B sets out a list of clauses where premium will be charged. Examples: relaxation of restriction provisions for setback area, variation of number and dimension required under the parking provision or loading/ unloading provision, etc.
Q2: When approval/ consent will be granted?
Cases where premium is not chargeable:
- For five specified situations in Part (I) of Appendix A – namely, DD/DDH, recreational facilities, office accommodation for watchmen, owners corporation or owners committee office, quarters for watchmen and caretakers – and all situations in Part (II) LandsD will generally assess and grant approval/consent at the general building plans (GBP) checking stage. Hence it is not necessary to apply separately to LandsD for approval/consent under lease.
- For other situations in Part (I) of Appendix A, it is still necessary to apply separately to LandsD for approval/consent.
Cases where premium is chargeable:
- For four specified situations in Appendix B which might generally be assessed and granted approval during the GBP approval stage – namely, relaxation of restriction provisions for setback area, exclusion of above-ground ancillary parking spaces accepted by BD, varying number and dimension under parking provision or loading/ unloading provision, varying or widening of vehicular access points – LandsD would aim to advise lot owner of the premium payable within 16 weeks of receiving a valid application.
- For other situations in Appendix B, lot owner will still need to apply separately to LandsD for approval/consent and LandsD will process the application (including premium assessment) in accordance with the current arrangement.
We welcome the new Practice Note as it provides more certainty and transparency on whether certain applications for approval/consent under lease will be chargeable for land premium – and, more importantly, clarification that certain applications will be processed within 16 weeks during the GBP approval stage.
We believe these new streamlined arrangements will enable lot owners – in particular developers – to better plan their budgets and timing of developing their lots.
Online link to the new LandsD Practice Note is here: