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Jake Van Der Kamp

'In drawing up the proposals, we have sought to maintain a careful and delicate balance between facilitating private redevelopment efforts and protecting individual property rights.'

Government spokesman

IT IS EASY for government officials to say that they will maintain this balance but not so easy for them to do it when they propose that any developer be allowed to acquire a building by compulsion when he owns 80 per cent of that building.

Reducing that threshold from 90 per cent inevitably erodes property rights, whatever they say. They know it, too, which is why they have hedged their proposals by applying the new threshold only to buildings more than 40 years old, buildings in which only one owner is a hold-out or buildings in which 10 per cent or more of the ownership is untraceable.

Let us give them their due, however. Hong Kong has a unique difficulty. In other developed countries most owner-occupied residential property is in the form of detached homes or townhouses. Buy one unit and you have bought 100 per cent of the building.

But only a very small proportion of our housing stock is of this form. We have built vertically rather than horizontally and most of our home ownership is in the form of strata title.

What can you do, then, in a city in which you want urban renewal of moribund homes?

The owners will occasionally get together and agree to redevelopment but there is not even an owners' corporation in many of these buildings and it is rare to see all owners readily agree to move out. Some of them, particularly older people, simply do not want to move, some cannot be traced (it is a distinct problem in many older blocks) and some hope to hold the others to ransom for a higher price by being the last to agree.

Should we allow a few, or even only one, to deny all others the right to make better use of their ownership of the underlying land by constructing better homes for themselves on that site?

And if they choose to move elsewhere, should we deny them the right of a price that reflects the redevelopment value of the site, which would allow them to buy those better homes elsewhere? There is clearly an argument to be made for compulsory acquisition in Hong Kong's circumstances.

But equally, there is the predatory developer who licks his lips at the chance of using an 80 per cent threshold to force out owners of older low-rise blocks that are not moribund and that no one else would target for urban renewal. There are plenty of such blocks in this town.

I shall declare myself here. My wife and I are the owners of a flat in such a block. We like our flat, we have lived there for a long time, our children have grown up in it, it is solidly built and we have contributed to maintaining it in good condition. We do not relish seeing our government accommodate developers who are now sniffing at pushing us out.

Ordinarily, we would not need worry. A developer who reaches the threshold does not have the automatic right to redevelop. He has the right only to apply to the Lands Tribunal for compulsory sale of the remainder and the tribunal must pay heed to any objections from minority owners.

The tribunal requires that the developer offer fair market value to them, which means value on redevelopment, and it takes into account the state of repair of the existing building. Attention to this last point has hitherto been enough to stymie forced acquisition. When owners keep their building in good repair the tribunal lets them keep their homes, whatever level of ownership any one owner has achieved.

But if we are to have the threshold reduced to 80 per cent from 90 per cent, then I think protection of property rights means at the very least inclusion of a formal statement in the new rules that good repair is enough to negate forced sale. It should be right up there with the provisions about age of building, single hold-out and untraceable owners. It is the only way to ensure that the 'careful and delicate balance' with property rights is maintained.

And to give developers something in the balance as well, I think we need one more provision in these new rules. It is to allow an 80 per cent threshold for forced acquisition of well-maintained commercial buildings where their use has become uneconomic because of a changed neighbourhood.

For instance, where a commercial building in good repair has been designated for a high proportion of car parks because of a transport node nearby, we should allow the forced sale threshold to apply if that transport node has been shifted to a new location. The high number of car parks is then no longer needed. The site can be better used.

But let us not go to less than 80 per cent and let us also stick tight to those new 80 per cent provisions, however much developers may think they now have a foot in the door and can open it wider. Any further easing of forced sale would truly make a mockery of property rights.



A little give-and-take can help balance property rights trade-off