A worrying law on buying up old flats
It says something about the unease created by a change in the law making it easier for developers to force owners of old flats to sell up that it should prompt an unlikely alliance between four prominent citizens to safeguard property rights.
Lawmaker and former secretary for security Regina Ip Lau Suk-yee, former InvestHK chief Mike Rowse, Wan Chai district councillor David Wong Chor-fung and Dr Choi Kin, former head of the Hong Kong Medical Association, will monitor cases before the Lands Tribunal, to gauge the impact of a lower threshold for compulsory sale of properties. This shows little faith in the government's promise to trial a pilot scheme for mediating the inevitable disputes between developers and owners, who often lack the resources to hire surveyors or lawyers. This scheme was a belated concession to opponents, as the bill passed the legislature with the support of the functional constituencies.
The revamped law allows developers to seek compulsory sale of a building after acquiring 80 per cent of the property interests in it, down from 90 per cent. It affects residential buildings older than 50 years and those where developers own all but one unit.
The government claims it will help ordinary flat owners, speed up urban renewal and be fairer to everyone. That is questionable on all counts. Predictably, in buildings where developers have reached the 80 per cent threshold, they have broken off negotiations with the remaining owners, who now face reduced offers. The new law has thus effectively undermined the bargaining power of ordinary property owners. And there is already evidence that developers are attracted to old, but well-maintained buildings in high-value areas, rather than those in old districts more in need of urban renewal.
People's property rights are fundamental to a capitalist society under the rule of law. Ip's group is right to push for the legislation to be amended to create a robust mediation mechanism between developers and minority owners, and much more transparency in the acquisition process. Even that will not ensure the new law does not come back to haunt the government.