Concrete Analysis | New licensing law poses challenge for Hong Kong’s columbarium operators

The recent enactment of the Private Columbaria Ordinance will bring wholesale changes to a traditional business which has not been properly regulated in the past hundred years.

Under the new law, which came into effect on June 30 to enhance consumer protection, all private columbarium operators have to obtain a licence or a waiver from the government to sell or let out new niches.

Columbaria are structures divided into niches for people to store urns containing the ashes of their deceased loved ones.

The changes to the procedures to operate a legitimate columbarium cannot be easily understood by laymen. The ordinance is over 350 pages long and comprises 11 parts, covering topics ranging from the licensing procedures and requirements, rules on the operation of columbaria, to enforcement against non-compliance and restrictions on ash disposal.

One of the key prerequisites for obtaining a licence under the new regime is to meet land and town planning requirements. Operators may need to change their land use to columbarium development. Currently, there are 122 columbaria which do not comply with land or planning-related terms, with a large majority of these operating on land leases which do not explicitly allow columbarium use.

Setting aside the possibly lengthy application process, the land premium required is likely to drive most operators out of business. Taking a columbarium with 1,000 niches as an example, the owner may need to pay an overall land premium of HK$50 million if the government asks for a premium of HK$50,000 per niche. It has to be paid to the government up front before the operator can sell the niches.

The government needs to recognise that niches are not products that can be sold overnight – the sales period for 1,000 niches could be several years. Columbarium operators are not real estate developers, and raising capital to pay for the land premium will undoubtedly prove to be a challenge for them.