THERE ARE NOT many people who will shed a tear for the complaint that developers do not make enough money, but the Hong Kong Institute of Surveyors is on to something when it says that this is the reason for much of our urban blight. Make a trip by road from somewhere around Tai Po to Central and you may notice something odd. At first, all the buildings are new. Then, as you go through Kowloon, you run across belts of much older buildings and, as you come into Central, they are new again. The more normal pattern for an established city is from new to gradually older with a smattering of new in the centre. Hong Kong, a supposed capitalist city, has more the characteristics of Moscow than of London. There is a reason for it. Our land use policies are more like Moscow's than London's. The single greatest reason that you find all those older buildings in the middle is the government's practice of charging lease-conversion premiums on all redevelopment of moribund property to more lucrative uses than permitted in the existing leases. The Lands Department's policy is to charge a premium equivalent to the increase in value from all such changes in lease terms. It leaves a little extra on the table for developers as they would otherwise never redevelop anything and sometimes that little extra is a big extra. Developers tend to be cleverer than the Lands Department. But it is a different matter when you deal with a rundown old residential block in Kowloon. Typically, such a building has many owners. Finding them all and convincing them all to agree on a redevelopment proposal is a huge task. Invariably, a good number of them have moved abroad or died and the heirs cannot be traced. Most of all, they tend to show little interest because there is little profit in it for them. A new building may be worth many multiples of the old one but what the Lands Department does not take out of the difference the developers will. The government tried to do something about this years ago with the Land Development Corp (LDC), which could force the purchase of such buildings. Nothing much ever came of this and so the government tried again about three years ago with the Urban Redevelopment Authority (URA). That one was originally proposed by Chief Executive Tung Chee-hwa with the hint that perhaps lease-conversion premiums should not be charged on such projects. The hint never turned into reality and the URA has thus effectively gone the way of the LDC. Same problem. Same response. Why bother if we do not get the money? It is this essential nub of the difficulty that the Institute of Surveyors has once again addressed in its recent recommendation to government that lease-conversion premiums be reduced for such redevelopments. It phrased the suggestion in terms of the interest that developers would show if they could take a greater share of the potential profit but we need not quibble with this. If government takes less and leaves more for others, then those others can negotiate among themselves for what share of it they will get. The underlying principle is undoubtedly the right one. If you want to cure urban blight, then make it worthwhile to do so for the people who have an interest in what is now blighted, be they developers or the present owners. If the money is there, they will find their own way of dividing it among themselves. And this applies to more than just residential property. We still have more than 220 million square feet of industrial floor space in Hong Kong, little of it used any longer now that industry has moved across the border. There is also little that can be done with it while the lease terms still restrict its use to industrial alone. Meanwhile, we have only about 100 million square feet of private office space. Our economy has made a change from manufacturing to services but the buildings have not. Once again, there is an obvious reason for it. Our land use policies and our creaky system of lease conversions have frozen us in the past. Perhaps it is time to reform the system, not just make adjustments to the level of premium charged on certain buildings. An annual land use tax to supplant premiums, for instance, would bring much more consistency to the government's land revenues and do much more to encourage redevelopment of blighted areas. It would be a big change, I grant you, and require much more thought than has gone into just one paragraph, but it may be time to start thinking about it.