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Carrie Lam's policy address 2018

Hong Kong leader sets out plans for public-private sector ‘land sharing’ scheme, despite fears over possible collusion

Chief Executive Carrie Lam Cheng Yuet-ngor announces proposal that would allow private developers to receive faster approval for projects if they hand part of their farmland over to the government

PUBLISHED : Wednesday, 10 October, 2018, 8:58pm
UPDATED : Wednesday, 10 October, 2018, 11:49pm

Hong Kong’s private developers will be invited to hand part of their farmland to the government in exchange for higher density and quicker development approval in a “land sharing” scheme proposed by the city’s leader in her policy address on Wednesday.

The announcement came despite recent public fears that such a plan could lead to collusion between the government and developers.

Chief Executive Carrie Lam Cheng Yuet-ngor’s proposal aims to release the development potential of 1,000 hectares of privately owned farmland in the New Territories.

It came as part of a basket of measures announced in the policy address to make better use of the existing land resources to ease the housing crisis in the world’s most expensive property market.

Under the scheme, the owners of private farmland can apply to the government to increase the development density for their sites, but at least 60 or 70 per cent of the increased floor area would have to be used for affordable public-sector housing.

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“If we want to unleash the potential earlier and make better use of privately owned land … we believe we can do so through [the scheme] that is based on fairness and high transparency, so as to meet the needs of both public and private housing in the short to medium term,” Lam said in her address.

Developers have previously found it difficult to build on their farmland due to the low permitted development density, lack of infrastructure and high costs for changing the land use from agriculture to commercial or residential.

The proposed scheme will allow interested developers to submit proposals to the government, explaining how much extra density they would like to add, how increasing density for the proposed sites would hasten housing supply in a “substantial” way, and whether they would like to enhance infrastructure for the sites.

Although developers will still have to pay for converting the land use, the cost will only reflect the value of the area involving private flats, and the cost of building infrastructure will be deducted from the cost, if developers agree to provide infrastructure.

A government source said although details of the Land Sharing Pilot Scheme would be introduced in the first half of next year, officials initially preferred a mechanism where the government would be in charge of developing the public-sector areas.

Most of the public-sector floor area would be for subsidised housing for sale, as opposed to low-cost rental housing.

Lam said the government-appointed Land and Development Advisory Committee, which comprises mostly non-official members, would advise the government on the applications under the scheme.

The source added that applications would also need to go through Lam’s top advisory body, the Executive Council, and then through the Town Planning Board which engages the public, before they are again put forward to the council for final approval.

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Lam also pledged to release the information of the pilot scheme in a timely and transparent manner to dispel public worries.

But Yeung Ha-chi, of land concern group Liber Research Community, said he was worried that such a scheme would encourage big developers to further consolidate small farmland holdings at a low cost to benefit from the scheme, which could bring great returns.

“Big developers have been hoarding farmland, which is our precious land resource, for years, waiting for chances of development,” Yeung said. “Why are we not punishing them for hoarding land, but awarding them with higher development density?”

Yeung said the government should use its power to buy back such farmland for wholesale planning and development.

Property sector lawmaker Abraham Razack said he saw no problem with 70 per cent of the increased floor area going to the public sector.

But he stressed that the crux of the issue remained the high land use conversion costs, which were at a “ridiculous level”.

“The whole problem with Hong Kong’s land price is the premium is excessively high,” Razack said. “If you pay for the raw material at a very high price, would you expect the end product to be cheap? It’s not possible.”

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In her address, Lam also proposed to make better use of existing land resources. She invited the Urban Renewal Authority to identify one or two clusters of housing under the Civil Servants’ Co-operative Building Society Scheme for redevelopment. Many such buildings are old and have not used up the areas’ permitted development density.

To release bigger low-cost public rental flats for families in need, Lam also proposed to encourage elderly rental flat tenants to move into smaller rental flats. Under her plan, households with all members aged 70 or above in under-occupied flats can apply to move into smaller flats, with rental costs waived for the rest of their lives.

A government source said there were over 16,000 eligible households.

Additional reporting by Alvin Lum