Indigenous villagers who sell their rights to build small houses have legitimate reasons for doing so, and the government should normalise the long-time practice, said a councillor representing the Heung Yee Kuk, guardian of traditional New Territories interests. His call follows the revelation that villagers in deserted Wong Chuk Yeung, even some living as far away as Britain, have quietly profited from selling their rights to developers in exchange for free houses or cash payments of HK$500,000. They have also sold a majority of the land to developers who are set to profit handsomely. The sales appear to violate the spirit, and possibly the letter, of Hong Kong's 39-year-old small-house policy, and may make it harder for future generations to exercise their rights to build a small house - a unique, once-in-a-lifetime right granted to indigenous adult males in the New Territories. The sales would add to the pressure on the city's long-term land and housing supply, development minister Carrie Lam Cheng Yuet-ngor warned this week. Critics said the government should consider imposing more restrictions on small-house rights, such as limiting the sale of small houses to non-indigenous villagers or even putting an end to the small-house policy entirely. Lawmaker Cyd Ho Sau-lan said normalising the right to sell was 'unacceptable'. 'This is discrimination against ordinary Hong Kong people who are not given this privilege, especially at a time when most people have housing problems. The right itself [to build a small house] has to be put to an end,' she said. Democrat legislator Kam Nai-wai said it was time for society to consider setting an expiry date on the small-house policy. 'It might entail compensation to the villagers, but let's discuss it to find a solution,' he said. Paul Zimmerman, of Design Hong Kong, said the selling off of house rights had exposed the bankruptcy of the small-house policy. 'It is simply seen as a donation from the public to those born anywhere in the world, but who can prove their ancestry to be in a New Territories village,' he said. But Lam Kwok-cheong, a lawyer and a kuk councillor, said villagers rarely sell off their rights solely for monetary gain. He said government bureaucracy and soaring building prices had forced them to adopt the practice. 'There could be times an indigenous villager is in financial difficulty and desperately needs money to support his living. You can't blame him for doing that because he needs money,' he said. 'But for many others, they sell the rights because they simply can't afford the bill to build the house. That's why they enter a co-operation deal with the developers. In some cases, the government bureaucracy sits a small-house application in the drawer for so long that building prices have risen to beyond an affordable level to the villager.' It now costs between HK$1 million to HK$1.3 million to build a three-storey house with ordinary construction materials and fixtures, according to an indigenous villager. Under the small-house policy, all adult male indigenous residents from about 600 recognised villages in the New Territories are entitled, once in their lives, to build a three-storey house. To get the house, they file an application to the Lands Department if they have their private land in the village development zone. The department bans any villager from entering an agreement on his rights and interests before getting approval to build the house. Despite that, many of these prior agreements are privately enforced between villagers and developers, making it difficult for officers to detect. 'The Heung Yee Kuk has an idea that - since these deals are not something new and there is a genuine need for them - why can't the government just allow it?' Lam said, without confirming if the kuk has ever submitted such a proposal to the government. The Development Bureau and Lands Department said it was preparing a response yesterday. Lam said people who did not live in the New Territories misconstrued the small-house policy as a privilege because they did not know much about its history. He said land in the New Territories was owned by the indigenous villagers until British colonial forces settled and imposed conditional crown land leases on them. 'It should have been rectified in 1997, so that the land owned by the villagers could be freely transferred and developed and there would be no restriction on how tall a building could be,' Lam said. 'But this has never happened. So what we have now is not a privilege.' A planning consultant familiar with the sale of small-house rights said one way to plug the loophole and preserve the spirit of the policy was to restrict sales to indigenous residents only. But that would not address the problem of meeting so-called infinite demand. 'Look at those villages in Sai Kung. How many of them are inhabited mostly by indigenous people? But limiting their transfer rights sounds politically outrageous,' he said.