Developers with construction sites in the New Territories could soon be paying rent based on the capital value of their plots, even though the property is not generating any income. The proposed change is part of the deliberations of a Legco Bills Committee that is hearing suggestions on the Government Rents (Assessment & Collection) Bill. Prior to the introduction of the bill, New Territories developers only paid rates on their completed projects as well as a nominal government rent. Under the new system, government rents will be tied to rateable values, which are at present based on the rental income generated by a property. However, the Government has opted to use a construction site's capital value to determine its rateable value. Hilary Cordell, a solicitor with Baker & McKenzie and a specialist in property valuation, said the new regulation was a major departure from the Joint Declaration. The Joint Declaration provides that after June 30, the ground rent for properties the Government leases out will be 3 per cent of the rateable value. 'Rateable values are conventionally based upon the amount of rental income generated by a property,' said Ms Cordell. 'The proposal is now to base government rent on capital values in certain significant cases. 'I would query whether this is in accordance with the intention of the Joint Declaration.' The Rating and Valuation Department said this method of calculating government rents was legal. Marius Tung Yiu-chiu, technical secretary at the Rating and Valuation Department, said: 'Such a notion has been discussed by the Bills Committee and we have no intention of changing it.' The bill under discussion deals with the collection and payment of government rents on various classifications of property, including construction sites and agricultural land. 'Construction sites and agricultural land have no rateable value,' Ms Cordell said. 'We are now facing a situation where, in a sense, there is to be deemed a rateable value for the purposes of collecting government rent.' The rateable value has been set at 5 per cent of the capital value of the construction site. Under the new system, developers will pay a much higher government rent. Previously, any government rent paid on an unfinished property was a nominal sum amounting to, in some cases, just a few dollars a year. Ms Cordell said incorporating such a fundamental change in draft regulations not available for public consideration was unusual. Mr Tung said this regulation would affect a small number of sites in the New Territories.