If you could choose again……
Date:2012.05.07
Date:2012.05.07
Recently there was a terrible accident in Hong Kong Garden. A twelve year old girl fell from a height when she was cleaning her planter. The “killer” was the unauthorized building works which created the planter by converting a fixed window to a sliding door. An order of removal of unauthorized structures to the residents of Hong Kong Garden was issued by the Hong Kong Housing Authority in 2010. The residents were required to dismantle these dangerous works but, unfortunately, nobody complied with this order. Before this accident occurred, the residents did not agree with the order to dismantle their illegal structures and the building owners’ corporation was attempting to negotiate with the government.
All buildings in Hong Kong (excluding small houses in New Territories) are supervised by the Buildings Ordinance (Cap 123) so any person intending to carry out building works is required to appoint an Authorized Person or a registered structural engineer to prepare plans for the approval of the Buildings Department as it is necessary to obtain prior consent from the department before carrying out building works.
It is generally believed that “cement concrete” is safe so many people go ahead and carry out unauthorized building works for their own convenience, thinking wrongly that such illegal works are not dangerous.
Unfortunately, people are only made aware of the real danger posed by these works when an accident happens. The Buildings Ordinance is for protecting the design of premises and safety of building works. The only question is whether it is our lack of awareness of public safety or the weak supervision of government that is the major cause of such accidents.
There are a great number of buildings with unauthorized building work and illegal structures in the New Territories. The Government is now reinforcing the law, requiring property owners to register their unauthorized building works. However, there is a strong voice of opposition from property owners, who insist on maintaining their illegally altered homes and refuse to cooperate with the Government.
Think about those Hong Kong Garden owners. If they could choose again, would they be willing to bear the responsibility of carrying out dangerous building works?
If you are honest with yourself, would you want to take dangerous chances or would you be willing to register your dangerous building work voluntarily?
The impact of new HOS flats on the property market
Date: 2012.02.17
In 2003, the HKSAR government decided to cease the building and sale of HOS (House Ownership Scheme) flats. In 2011, as a response to the extremely high cost of private sector property, the government announced that the building of new HOS flats would be resumed. Some people are skeptical that the new HOS will have any effect on the property market. Their reasoning is that there are only 5,000 units and the Government estimates that the HOS flats will be launched onto the market in four years which will not exert any influence on the current property market.
5,000 new flats does not appear to be a very large number, but each Home Ownership Scheme application is over-subscribed many times. For example, In July 2010, the sixth HOS application was oversubscribed eleven times. The supply of private housing is about twenty thousand to thirty thousand units per year. In other words, although the Government only offers 5,000 new flats, prospective flat owners know that private property is not their only choice as they can choose to purchase a new HOS flat, which is relatively cheaper and more affordable to them. From an economic point of view, HOS flat may be a viable substitute for private housing and perhaps a more practical choice. . Consequently, the demand for private housing will be reduced because of the availability of new HOS flats because when the private housing supply remains unchanged and demand decreases, the price will drop.
Some people are also under the impression that the HOS scheme only serves people who cannot afford to purchase private housing and that for the private housing market, the target customers are mainly property investors. Consequently they think that new HOS flats may not have an impact on the private housing market. However, property price may change because of psychological factors. Private property prices have increased steadily. Although HOS flats only fulfilled part of the demand from Hong Kong residents, there could be an impact on investors’ confidence in the property market. Some people worry that the new HOS scheme will fuel a significant decline in the property market and that the government should learn from the 85,000 building units policy enacted in the past.
In fact, if the supply of HOS flats remains stable, it would help stabilize the property market and there would not be any significant negative impact on property values. Although the announcement of the new HOS scheme has already had some impact on the property market, people should not regard it as a tool to regulate the property market. The HOS scheme is intended as a form of public welfare which can assist people with relatively low incomes to purchase a flat so that they can release their public housing units to people who are in more need.
Short-Term Tenancies and Waivers
Date: 2011.10.06
In answering Hon David Li Kwok-po’s question regarding the practices and implementation of Short-term tenancies (STTs) and waivers in Hong Kong on 16 November 2011, the Secretary for Development, Mrs. Carrie Lam has raised the following key points:
1. The Government may put vacant land to temporary use by granting STTs through open tender or directly to applicants normally with support from the relevant Policy Bureau on policy grounds. For land already subject to leases granted by the Government, waivers may be granted by the Government on application by the lessees for waiving certain specific conditions under the leases. Such STTs and waivers are processed by the Lands Department (LandsD) according to the applicable procedures.
2. LandsD is acting in a landlord capacity in negotiating and settling terms with a prospective tenant for a direct grant of STT or with a lessee in respect of a waiver application.
3. At the moment, the Government does not have a policy to release information in relation to such STT or waiver applications in advance of issue or renewal having regard to the considerations referred to in (4) below.
4. Direct grants of STT are normally granted with support from the relevant Policy Bureaux on policy grounds and there are no plans to disclose details of such applications pending consideration by the relevant Bureaux and Departments. Furthermore, information provided by the applicants during the application stage is primarily intended for the processing of their applications and the applicants may make changes in the process. It is considered inappropriate to publish the information concerned when an application is being considered. The waiver documents, once approved and executed, will be registered at the Land Registry and interested persons may inspect such information at the Land Registry.
5. A main reason for registration of land documents at the Land Registry is to provide prospective purchasers or mortgagees with access to information on the ownership of or encumbrance upon the land and/or the property. The Government normally prohibits alienation of STTs and hence registration of STTs is not considered necessary. As for the waiver documents, they will be registered in the Land Registry after execution.
For granting of STTs through open tender, the LandsD from time to time invites applicants to tender designated Government land at a scheduled invitation date. The Government will update and publish all relevant information in respect of the Government land including, but not limited to, the location, site area, proposed terms, proposed user and a site plan. The proposed term varies from 1 month certain and thereafter monthly to 3 years certain and thereafter quarterly.
For granting of STTs and waiver by application, prospective applicants are advised to ensure all uses or developments on Government land (in the case of STTs) and private land (in the case of waivers) conforms with the Town Planning Ordinance before submission of STT and waiver application to the LandsD. Where permission is required from the Town Planning Board for a use or development, the application for such permission should be made in a prescribed form to the Town Planning Board for consideration.
Prospective applicants are advised to engage competent professionals to assist them in making these applications.
Acquisition of Chinese tenement buildings in the urban area
Date: 2011.10.06
We often see TV commercials telling us that if we need money, old buildings can be mortgaged or pledged in return for quick cash. Some advertisements even claim that borrowing can be approved in only 10 minutes. The Reverse Mortgage Pilot Scheme caters to property owners who are aged 60 or above who are able apply for loans without other collateral. The maximum valuation of the properties under this scheme normally would not exceed $8 million. Property owners choosing the whole life plan can receive at least $ 14,000 per month but if you wish to obtain a large sum of cash immediately, the Reverse Mortgage Pilot Scheme might not be for you.
In recent years, it hasn’t been necessary for owners of old buildings, especially dilapidated Chinese tenements in the urban area, to apply for a second mortgage as they could still draw cash from their properties. This is because property developers are always on the lookout to acquire old tenement buildings for redevelopment in the urban areas. At the same time, many investors are also looking for older properties to renovate into “Guest Houses” or “Compartments” in order to generate higher rentals. Owners are no longer finding it difficult to sell their properties and to attract offers of hard cash from developers and investors.
The only problem is in determining what the reasonable acquisition price of old tenement buildings might be. According to general valuation principles, it can be defined as Existing Use Value “EUV” and Redevelopment value “RDV”. Genuine purchasers, including both users and investors, are looking to buy a property based on its EUV only, which is assessed by comparing the transaction prices of similar properties with relevant adjustments for location, building age, floor level, view , aspect, facilities and so on.
The assessment of RDV is relatively more complicated. Basically the EUV of all units within the subject building have to be assessed in order to find out the proportionate EUV of the subject property to the subject building. Then the redevelopment value of the subject site is assessed based on the relevant Government lease conditions, town planning provisions and market needs. The RDV of the subject property can be determined by applying the EUV proportion to the redevelopment site value. This valuation basis is currently used by the Lands Tribunal in cases of order for sale under the Land (Compulsory sale for redevelopment) Ordinance (Cap. 545).
Because of this, old buildings can still often command a high market value. Property developers and estate agents employ various attainment techniques during the acquisition process. Under Cap. 545, property owners must sell their properties after the developers have acquired an 80 % (for buildings aged 50 years or more) or 90 % (for buildings older than 40 years) share of the building. As a result, owners who are put in the position of having to sell their properties should appoint a professional surveyor in order to protect their best interests.
Who said old buildings cannot live for eternity?
The Buildings Department’s special operation targeting unauthorized sub-divided flats
Date: 2011.08.25
In recent years, Hong Kong has been facing the growing problem of shortage of housing due to the lack of new public housing and high rentals. Consequently, some flat owners have sub-divided their properties into two or more individual units for rental. Most of these are concentrated in areas such as Sham Shui Po, To Kwa Wan and Kwun Tong. Inevitably this creates problems. Not only does the construction of sub-divided flat units affect the structural safety of the units it themselves, it also compromises fire safety standards. This issue has attracted public attention recently through extensive media coverage. Consequently, the Buildings Department issued a departmental briefing on 2nd August, 2011 detailing the progress of a special operation targeting unauthorized sub-divided flats.
The Buildings Department launched this special operation on 1 April, 2011 with a view to inspect suspected sub-divided units and ascertain whether any alteration and addition works undertaken are in compliance with the planning, design and construction requirements under the building regulations concerning fire safety, drainage works and structural safety. As a result, the Buildings Department deployed staff to inspect a building in To Kwa Wan on 1 August, 2011. According to the Buildings Department’s investigation, there is a total of 51 sub-divided flats contained within 12 of the approved domestic flats in the building. Assistant Director of Buildings Department, Mr. Hui Siu-wai, stated that the department had attempted to carry out inspections on previous visits and had left messages for the relevant parties of the sub-divided flats over the previous two months. However, some of the owners still had not contacted them to arrange entry to the sub-divided flats to carry out inspections. Accordingly, the staff had no alternative but to exercise their powers under the Buildings Ordinance section 22 and broke in to the flats concerned to carry out inspections in order to ascertain if there were unauthorized building works affecting the safety of the building. As part of this special operation, the Buildings Department will inspect 150 targeted buildings involving more than 1,300 sub-divided units per year.
In January 2010, a building in Ma Tau Wai Road collapsed and it was found that some of the flat units inside were unauthorized sub-divided units. Later, in June 2011, when fire broke out in a building in Ma Tau Wai Road, it was discovered that 14 of the flats units were sub-divided into 44 small units in this building. The fire caused many casualties. Also two back doors had been closed off due to the modification of the flat units, so the residents had no means of escape during the fire. All these unauthorized building works endanger public safety so all property owners should cooperate with department staff regarding inspections in order to expose unauthorized construction work and restore flats to their approved condition as soon as possible to avoid accidents.
Amendment of “Master Schedule of Notes to Statutory Plans” to Facilitate the Realization of the Revitalization of Industrial Buildings
Date: 2011.07.13
In his 2009-10 Policy Address, the Chief Executive announced in his 2009-10 Policy Address new measures to promote the revitalization of old industrial buildings through encouraging the redevelopment and conversion of vacant or under-utilized industrial buildings. The objective is to provide suitable, readily available and suitable land and premises to meet Hong Kong’s future economic and social needs. This will also set in motion , including the development of higher value-added economic activities, such as the six economic areas identified by the Task Force on Economic Challenges.
To facilitate the realization of thise revitalization policy, the Town Planning Board (“the Board”) has approved the amendment of the “Master Schedule of Notes to Statutory Plans” (“MSN”) and proposed amendments to six Outline Zoning Plans (“OZPs”) with “Industrial” zones on 10 June 2011. On 30 June 2011, the Board announced the amendment of six draft OZPs incorporating the amendment as follows:
* Draft Kennedy Town and Mount Davis OZP No. S/H1/19
* Draft Chai Wan OZP No. S/H20/18
* Draft South West Kowloon OZP No. S/K20/26
* Draft Fanling/Sheung Shui OZP No. S/FSS/15
* Draft Sha Tin OZP No. S/ST/25
* Draft Ping Shan OZP No. S/YL-PS/13
* Draft Chai Wan OZP No. S/H20/18
* Draft South West Kowloon OZP No. S/K20/26
* Draft Fanling/Sheung Shui OZP No. S/FSS/15
* Draft Sha Tin OZP No. S/ST/25
* Draft Ping Shan OZP No. S/YL-PS/13
The amendment mainly involvedprimarily encompasses revisions to the Notes for the "Industrial" zone of the OZPs by adding, where appropriate, the uses of "Eating Place (not elsewhere specified)", "Institutional Use (not elsewhere specified)", "Public Clinic" and "Training Centre" in wholesale conversion of an existing building in Column 2 of the user schedule to increase the flexibility for changes of uses in wholesale conversion of existing industrial buildings.
To address concerns about fire safety, the such changes of uses would only be permissible, upon application, in respect of wholesale conversion of an existing industrial building so that industrial and commercial uses would not co-exist after conversion.
At present, there are thirteen OZPs with “Industrial” zones. The above six OZPs referred to above arecomprises the first batch of amendments and the Board will revise address the remaining seven OZPs to reflect the revised MSN when opportunity arisesat the appropriate time.
With the abovese new measures in place, it is anticipated that it can further facilitates the adaptation and revitalization of old and under-utilized industrial buildings can be more effectively facilitated and in order to unlock the development potential of industrial areas.
For details further information about the policy of Revitalization of Industrial Buildings and Change of Use of Industrial Building (regardless it is for wholesale conversion orboth wholesale conversion and scatter units), please consult our Town Planner or General Practice Surveyors.
Perhaps
Date: 2011.05.23
Recently the subject of Unauthorized Building Works has become one of the hottest news topics in Hong Kong. Properties belonging to several New Territories district council members and their relatives appear to include Unauthorized Building Works; even a council member with lawyer’s background has been found to have added an extra glasshouse to his residence. This suggests that no matter what a person’s occupation is, Unauthorized Building Works regulations have always been taken lightly in rural areas.
According to New Territories Land (Exemption) ordinance, all houses without the prior approval of the Building Department must not be higher than 3 floors and each floor must not be more than 700sq. ft in area, while the height of the house should exceed 27ft. Consequently, most of the village houses in New Territories look very similar as the guidelines have been in force for many years. Village houses that conform to these criteria are be given a certificate/ letter of compliance from Lands Department as proof of lawful compliance.
However, we can also see why so many village houses have three floors or more as some property owners, instead of approaching the Land Department for approval, consulted contractors directly for advice. Very few property owners begin building construction only after they have received approval from the Lands Department.
If one constructs additional housing on the rooftop of buildings in urban area, no matter what materials it is used for construction, the Lands Department will issue an order served under section 24(1) for removal of Unauthorized Building Works. Property owners are then required to clear the rooftop of such works within a specified period of time. If the owners do not do so, the Building Department has the authority to register a clearing order with the Lands Department and remove Unauthorized Building Works. Owners are responsible for removal costs after structures are removed.
In the New Territories, most Unauthorized Building Works are not registered with the Building Department so the Lands Department treats these cases as a breach of lease conditions. However, considering the proliferation of Unauthorized Building Works on rooftops in the New Territories, the Lands Department should expend much more effort in handling this problem.
Secretary for Development, Mrs. Carrie Lam recently mentioned problems with Unauthorized Building works in recent press releases, suggesting “perhaps” they can easily handle these problems in a rationalized way, either by tolerating Unauthorized Building Works or authorize Building Works by the payment of a premium. If indeed these are the methods the government intends to employ to tackle the problem, it raises the following issues:
(1) Owners of existing legal houses might add Unauthorized Building Works in the future to increase the current three storeys to four storeys.
(2) The market value of village houses comprising a third floor and roof will eventually rise due to Unauthorized Building Works from 700sq. ft. to 1400 sq. ft; do you think this rise in market value is reasonable?
(3) Owners of rooftops in urban area perhaps will complain that government is being unfair to them; they will object strongly about the way government handles Unauthorized Building Works.
Perhaps the government has taken too long to address the problem of Unauthorized Building Works and now may be the time to handle this issue seriously.
Remarks: If you have any real issues regarding Unauthorized Building Works, it would be more appropriate to seek professional advice from surveyors.
Is the “My Home Purchase Plan” really beneficial to Hong Kong people?
Date: 2011.04.24
Date: 2011.04.24
At a time when home purchase is out of reach of middle class Hong Kong, the Government is launching “My Home Purchase Plan” to assist eligible citizens to buy their homes. Applicantscan rent no-frills flats at prevailing market rent for a tenancy period of up to five years within which the rent will remain the same. Within a specified period tenants of the plan may purchase the flat they rent, another similar flat at prevailing market price or a flat in the private market. They will receive a subsidy equivalent to half of the net rental they have paid during the tenancy period to use towards the down payment.
This initiative is designed to help people to buy their first flat and is well-intended but is it really beneficial to Hong Kong people? Chief Executive Donald Tsang maintains that it will give middle class people a breathing space to save more money for a deposit to allow them to join the property ladder while the current property market is overheated. This would certainly work if price levels do not increase significantly within the five year tenancy periodbut if the property market continues to rise, the subsidy will not be enough for the tenants to come up with a big enough deposit unless they have also saved a considerable sum within this period. This will be difficult for many as the average family income is about $20,000 and they must pay a monthly rent of $8000 to $10,000 and also pay their regular bills such as water, electricity, gas, rates, education and food.
In addition, this plan does not limit tenants to purchasing "My Home Purchase Plan" units after the tenancy period. They can buy flats in the private market as well so many may well choose this route as the quality of private flats is much better. If so, this will merely add more pressure to increase prices of private property which will, in turn, help undermine the scheme.
To be fair, the subsidy is quite attractive. For example, for a tenant paying $8000 rental per month, the Government will return $240,000 to them after five years. If tenants do not have enough money for the first payment, they may also borrow money from friends or relatives or they may even help others to buy a property.
Of course, the plan has not been implemented yet and much of this is just speculation. However, from the information available, the "My Home Purchase Plan” could be a factor in pushing up property prices in certain sectors and the developers would benefit most. It would not the first time the Government's housing policies have impacted the market – the scrapping of previous Chief Executive Tung’s Chee-hwa’s notorious 85,000 public housing units programme is a good example. So the Government must establish finite policy rules now. If the Government really intends this scheme to put flat ownership within reach of more Hong Kong people, it should ensure that it will work before it’s launched.
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Further ISO Certification
For almost 25 years, we have been working with our Hong Kong and China clients to help build our community, create wealth and protect clients’ property rights using professional knowledge unrivalled in the industry. Unlike many of our competitors, we have been ISO certified (ISO 9001:2000) for some time. You’ll be happy to hear that as of November 2010, DSL is now also ISO certified (ISO:9001:2008).
Client Focus
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