A challenge on the home front

Chief Executive-designate Tung Chee-hwa must have the will to crack several taxing issues to boost Hong Kong's land supply if his pledge to relieve the territory's housing problem can have any chance of succeeding.

Hong Kong is not short of land. The shortage is of developable land whose supply is blocked by a number of hurdles which the administration is loathe to remove.

At present, the Government balks at developing large stretches of privately-owned land of mixed use in the New Territories for fear of running into resumption difficulties.

It has also refrained from reviewing the so-called 'small house' policy under which precious land is given to male descendants of indigenous residents of the New Territories to build free-standing three-storey houses - a terrible waste of land.

In the urban areas, archaic property ownership laws have allowed minority and absentee owners to bar majority owners of multi-storey buildings from redeveloping run-down premises.

Iris Tam Siu-ying, president of the Hong Kong Institute of Town Planners, believes these issues must be resolved to meet an increasing demand for accommodation from people and business.

The issue facing the SAR government after it takes office on July 1, she says, will be to resolve quickly the dispute over the reclamation of the harbour, the quickest way of making land.

And while she shares conservationists' concern over a shrinking harbour, the institute's view is that the reclamation should go ahead, but its scale can be trimmed by raising the plot ratio of the reclaimed land.

Even with the planned reclamation, it is imperative that the New Territories be developed.

Last year, a study by the Planning Department identified 15,800 hectares of rural land which are less than 50 metres above sea level and suitable for development.

The Government's view is that development in most areas would be difficult because they comprise a 'jigsaw' of small holdings, village settlements, unplanned container storage sites, flood-prone lowland areas, abandoned land, pig and chicken farms, golf courses, fish ponds, fung shui areas, burial grounds, wrecked car dumps and sites of special scientific interest. After these constraints are taken into account, only 3,111 hectares could be developed and ownership is a big problem.

Ms Tam says ways must be found to overcome such development constraints: 'Maybe the SAR government has to use its large reserve to buy the land from private owners or it may have to find a formula to develop it jointly with private owners.' One possible method of land resumption would be for Mr Tung to revive the land exchange certificate system under which private land owners gave up their holdings for certificates entitling them to bid for formed land.

There were imperfections in the previous system which caused the Government to have serious reservations about reviving it, but Miss Tam said the way forward was to refine, not abandon, it.

Great potential for further development existed in Au Tau and Kam Tin in northwestern New Territories, she said, where the Western Corridor Railway would pass through, and Ta Kwu Leng and neighbouring areas along Sha Tau Kok Road in northeastern New Territories She was surprised that the Territorial Development Strategy released last year said Kam Tin would provide housing for only another 30,000 people over the next 10 years. 'The area can easily hold 300,000 people.' There was a need for the SAR to review the density of development in the New Territories as a whole, to work out whether so much farmland should be kept for agricultural purposes and to probe the 'terrible waste' of land for small houses with a plot ratio of about one.

High-density development must be the way to go in Hong Kong and there was much scope for raising the plot ratio of land allocated for small houses.

At present, thousands of applications to build 'small houses' have been held up. Ms Tam believes indigenous villagers will be happy to accept a flat in a high-rise in lieu of a 'small house'.

In the urban areas, redevelopment of multi-storey buildings with multiple owners poses a major problem.

Although a building may be built on a site with only one title, individual owners of its hundreds of units own just a number of 'equal undivided shares' in the lot.

The law requires that all the unit owners share a common responsibility to maintain the building. The consent of all is needed before redevelopment can take place.

In theory, nothing can stop individual owners from reaching agreement among themselves on how the lot they jointly own should be redeveloped.

In practice, it is difficult to get hundreds of individual owners to agree to anything.

Developers who have managed to buy most units in a building often face two hurdles: individual owners may hold out for an exorbitant price, while other owners may be untraceable.

There is no mechanism to resolve an impasse between the majority and minority and absentee owners.

Only where a building is covered by an urban renewal project undertaken by the Land Development Corporation can a 'public purpose' argument be invoked to resume the holdings of the minority owners under the Crown Land Resumption Ordinance.

In 1995, the Democratic Party proposed solving the problem by allowing majority owners of a building to seek a court order for the whole lot to be auctioned with the proceeds shared among the owners.

The problem with this proposal is whether the proceeds should be shared equally among the owners according to their shares, which varies according to the unit size, or the value of their particular units.

There is also concern that it might breach the Basic Law's provision against infringing private property ownership.

Mr Tung may want to seek the expert help of Executive Councillor Leung Chun-ying, who has previously criticised the existing land ownership law as a British legacy unsuitable for Hong Kong.

Recently, the Planning Department identified industrial areas which could be used for residential purposes. But since multi-storey industrial buildings now fill these areas, redevelopment is not easy unless the law on multiple ownership is amended.

Understandably, there are concerns that an increasing land supply may pierce the property bubble, to the detriment of developers, property owners and ultimately the economy.

But with so much pent-up demand and an ever-rising population, the prospect of the property market heading for a downturn is low. Mr Tung can afford to act.