LCQ22: Land premium arrangements for lease modification applications in New Development Areas
9.11.2022

Following is a question by the Hon Jimmy Ng and a written reply by the Secretary for Development, Ms Bernadette Linn, in the Legislative Council today (November 9): Question: The Government announced in March this year the arrangements for charging land premium at standard rates for lease modification applications in New Development Areas (NDAs). In this connection, will the Government inform this Council: (1) of the respective numbers of lease modification applications in NDAs received, approved and rejected by the Government since the introduction of the aforesaid arrangements, as well as the number of applications currently under vetting; the average time taken for vetting and approving each application; (2) of the following information on the approved applications mentioned in (1): (i) the respective numbers of applications involving leases which were for agricultural use, non-residential building use and residential building use before lease modification; (ii) the respective numbers of applications involving leases for residential use and non-residential use after lease modification; (iii) the districts and areas involved; and (iv) the amounts of land premium involved; (3) whether it has plans to extend the standard rates approach to lease modification applications in more NDAs (such as the Hung Shui Kiu/Ha Tsuen NDA); if so, of the timetable; and (4) given that under the relevant requirement, lease modification applicants are not allowed to have their premium assessed by the conventional approach first, and then make a choice after comparing the assessed premiums under the conventional approach and the standard rates approach, whether the Government has assessed if such a requirement will dampen landowners' desire to apply for lease modification; whether the Government will consider allowing applicants to have one single opportunity to change their premium assessment option; if so, of the details; if not, the reasons for that? Reply: President, The 2021 Policy Address announced the extension of the arrangements for charging land premium at standard rates from the lease modifications for industrial buildings (IBs) redevelopment to the lease modification applications in New Development Areas (NDAs) under the Enhanced Conventional New Town Approach (ECNTA). The objective is to provide an alternative option to the regular conventional premium assessment mechanism, and provide certainty on the land premium payable through a set of standard rates promulgated in advance, so as to encourage more lease modification applications and facilitate their early completion to speed up housing land supply. The Lands Department (LandsD) promulgated in February 2022 the arrangements for lease modification applications for the Remaining Phase of Kwu Tung North and Fanling North (KTN & FLN) NDAs and started to accept applications. The standard rates for that NDAs were also announced in March 2022. In view of the positive market response to the standard rates arrangement for charging land premium, the Chief Executive announced in the 2022 Policy Address last month to further extend the arrangement to New Territories agricultural land outside NDAs, and regularise the arrangement for charging land premium at standard rates for IB redevelopment. The Development Bureau expects to put forward concrete plan by mid-2023. My reply to each part of Hon Ng's questions is as follows: (1) For the Remaining Phase of the KTN & FLN NDAs for which the lease modification application arrangements and standard rates have been promulgated, the LandsD has received a total of 18 applications before the application deadline on August 15 this year. Out of these applications, six have been accepted for further processing; seven were rejected due to non-compliance with the criteria and conditions prescribed by the Government (e.g. the application site was not planned for private development or did not meet the site area criteria); one application was withdrawn voluntarily by the applicant; the remaining four applications are being considered by the Government. The processing time of each application varies depending on the circumstances of each case. All accepted applications must reach agreement with the LandsD on the binding basic terms (including the amount of land premium) before the deadline of June 30 next year. (2) Of the six applications mentioned in part (1) that were accepted for further processing, five are currently (i.e. before lease modification) for agricultural use, and one is for residential building use. All six cases applied for residential use after lease modification, with some of them also applying to use part of the floor area for commercial use. The proposed site area to be granted for these applications ranges from approximately 5 000 square metres to 27 000 sq m. These applications are being processed and will gradually enter the stage of land premium processing. (3) The arrangement for charging land premium at standard rates is applicable to all lease modification applications in NDAs implemented under ECNTA (including Hung Shui Kiu/Ha Tsuen NDA). As mentioned above, the standard rates applicable to each NDA will be announced around the same time when lease modification applications are invited for the relevant NDA. (4) The current arrangement requires the applicants to opt, prior to the premium assessment, whether to have the land premium to be assessed by the conventional assessment mechanism or the standard rates approach. Given that the policy intention of standard rates is to enhance speed and efficiency, the choice of premium assessment approach is irreversible upon applicant's choice. If the applicants are allowed to choose the conventional assessment mechanism first and thereafter change their choice after comparing with the premium under standard rates, the processing time would be unnecessarily lengthened, which defeats the Government's intention of expediting the completion of lease modifications. Implementing the standard rates arrangement aims to provide an option that is simple, convenient and with certainty for handling land premium matters, thereby shortening the time required for lease modification so as to expedite land supply. Under the arrangement for charging land premium at standard rates, it only takes about one month from the LandsD's issuance of a land premium offer to the two parties reaching an agreement on the premium. As a matter of fact, the standard rates are openly accessible and transparent, and the calculation formula is straightforward and clear. Applicants can calculate the premium by themselves to decide which premium assessment approach to opt for. If applicants consider the standard rates premium acceptable, no premium negotiation is needed and the lease modification could be completed as soon as possible.