Strike the right balance in urban renewal plan

PUBLISHED : Friday, 10 March, 2006, 12:00am
UPDATED : Friday, 10 March, 2006, 12:00am

Faced with persistent demands from the property sector to further facilitate urban redevelopment, the government has proposed making it easier for developers to force the sale of buildings. The proposal requires critical scrutiny, as forcing property owners to divest their holdings strikes at the heart of private property rights.

At present, a person who owns not less than 90 per cent of the undivided shares in a lot can apply to the Lands Tribunal for a compulsory sale of the whole lot for redevelopment. The relevant law was introduced in 1998 after years of debate. Before then, a lot could be redeveloped only with the consent of every owner. For many multi-storey buildings with hundreds, if not thousands, of flats, achieving a consensus among all the owners was almost an impossible task. It took only one owner's refusal to sell to frustrate years of efforts by a developer to buy up every other unit at huge costs.

Since the law came into effect in 1999, only 19 applications for compulsory sale had been submitted by the end of last year. Of them, five had been granted by the tribunal and four are being processed. The others have been discontinued, apparently because agreements were reached between the parties concerned. The property industry has claimed that the process of gathering titles remains protracted, and has therefore asked for a lowering of the threshold to 80 per cent.

The government has evidently tried to strike a balance between protecting private property rights and facilitating redevelopment. It has not acceded to the industry's request, and has opted for a compromise. Officials have proposed lowering the threshold to 80 per cent for only three types of properties - a lot with all units but one acquired; a lot with buildings that are aged 40 years or above; or a lot with at least 10 per cent of its owners missing or untraceable.

The 'all but one' rule will make it easier to redevelop some old buildings with five to nine units. It is fair, as just one unit in this type of buildings may account for more than 10 per cent of the undivided shares of the lot. Missing or untraceable owners are a serious problem in many old buildings. Provided that the tribunal is satisfied that exhaustive efforts have been made to trace them, a small number of absentee landlords should not be allowed to block redevelopment.

There is a need, however, to fine-tune the proposal to lower the compulsory sale threshold to 80 per cent for properties that are more than 40 years old. The problem with this proposal is that it sees an ageing building as synonymous with a poorly maintained one. While that may be the situation for many buildings now, it cannot be right as a general rule forever. Properly maintained and refurbished, buildings can last a lot longer. As a result of building management initiatives introduced in recent years, there is reason to believe that buildings completed over the past two decades should remain perfectly habitable when they are 40 years old.

For too long, Hong Kong people have equated urban renewal with urban redevelopment. It is time they abandoned the misconception. Many cities have shown that neighbourhoods can be renewed without pulling down their old buildings. A Sustainable Development Council survey last year found widespread support for revitalising old urban areas. A sustainable lifestyle should not mean a preference for tearing down old buildings.

Instead of adopting the age of a building as a simple cut-off point for relaxing the forced sale threshold, the law should stipulate that the threshold can be lowered to 80 per cent only if a building is in a serious state of disrepair.

The caveat is needed both as a safeguard for private property rights and a check against rampant redevelopment. The existing 90 per cent rule is barely acceptable as a justification for breaching the rights of owners unwilling to sell; lowering the figure to 80 per cent, without proper caveats, just for the sake of facilitating redevelopment would be wrong.