The policy was designed to tackle the housing needs of indigenous villagers but has been increasingly exploited. Court cases have documented how holders of small-house rights applied to build houses while, for a fee, signed secret documents granting developers control over the land.

The enclave in question this time involves the villages of Tai Tan, Uk Tau, Ko Tong and Ko Tong Ha Yeung in Sai Kung. It is a 70-hectare parcel of land surrounded by two country parks and covered by interim land-use zoning. The area is recognised for its high conservation and landscape value. An outline zoning plan for the enclave is expected to be drafted by the end of the year.

In Tai Tan, the northermost village in the enclave, an entire hillside has been razed and cleared of vegetation in the past few months. Trees have been felled and the earth dug up, just metres from an ecologically important stream.

Fourteen small-house applications were filed with the Town Planning Board in 2014. They have yet to be approved.

But a closer look at the land transactions behind the applications suggests more to them than just a simple demand for housing. Records show that in 2013, four developers – Fame Wealth Development, Wise Champ Development, All Sure Development and King Palace Development – purchased 0.37 hectares of land, or 29 lots, from villagers in the area for about HK$24.7 million.

In June 2014 the land was carved up into 51 lots over 0.18 hectares and sold back to villagers within a day for about HK$12 million – around half of what was originally paid. The villagers then began applying to build small houses. Records indicate that Li Tat-lun, a son of the village representative, was a major dealmaker. He could not be reached for comment on Sunday.

The group’s findings reveal a complex web of landownership and property transactions involving developers and villagers in all three villages that draw parallels with the Sha Tin fraud case.

“Things we look into include transfer of land ownership, division of land lots, whether the land has been sold below market prices to the villagers, and whether applicants have been residing overseas,” said the group’s CEO, Paul Zimmerman.

He pointed to a similar situation in nearby Uk Tau, where a cluster of more than 30 small-house applications were filed last year, only to be mysteriously withdrawn once made public.

Two firms –New Faith International Management and Hanton – had acquired all the concerned land plots between 2006 and 2008 and they were sold back to villagers on the same day in August 2009 for about a fifth of the market rate.

The deal was financed by a firm under Terry Hung Shing-yin, a director at Hanton. Another Hanton director was Paul Yiu Yuen-on, who was reported at the time to be a former government chief architect.

Designing Hong Kong’s study found that Hanton had also sold land in nearby Ko Tong, where New Faith and a company called Sino Way International Investments are major landlords. A swathe of land has already been cleared there.

Sino Way’s directors are Cheng Yam-kee and British Virgin Islands-registered Chance Ever Investments. Another company of Cheng’s, East Fortune Properties, was involved in a land deals in Tai Tan.

Since interim planning rules were drawn up in 2013, 94 applications have been made to the board, 53 were withdrawn by the applicants and of the remaining 41, 13 have been approved with conditions, seven rejected and 21 are being processed.

Outside of village zoning, there have been 113 applications to the Tai Po District Lands Office and as of 2013, just four have been approved.

The Lands Department said the office, in processing small-house applications, would assess land transaction records and if there was evidence showing an applicant was not the only landowner or if there was a transfer of rights or interests, the application would be terminated and the case passed to law enforcement agencies.