Hong Kong introduces New Property and Land Measures in the 2023 Policy Address

The Chief Executive of Hong Kong, John Lee Ka-Chiu delivered the 2023 Policy Address on 25 October 2023. The Policy Address covers a wide range of land-related short-term and long-term initiatives to improve people’s livelihoods, from relaxing property cooling measures to increasing public and private housing supply by speeding up land development. A transcript of the Policy Address can be found here: Policy Address | The Chief Executive's 2023 Policy Address

We would like to provide you with a summary of the new property and land initiatives introduced in the Policy Address:

 

Managing Demand for Residential Properties

Since 2010, the Government has introduced several demand-side management measures to curb short-term speculation activity, reducing external demands. However, given the significant rise in interest rates over the past year, the Government has decided to make further adjustments to manage demand for residential properties (effective as of 25 October 2023):

• Reducing Buyer’s Stamp Duty (BSD) and the New Residential Stamp Duty (NRSD) from 15% to 7.5%.
• Shortening Special Stamp Duty (SSD) levied on property resales from three years to two years.
• Introducing a stamp duty suspension arrangement for eligible incoming talents to further enhance the stamp duty refund arrangement introduced last year. Under the refund arrangement, an incoming talent who has paid the BSD/NRSD will receive a refund of the stamp duty paid upon obtaining Hong Kong permanent residency after residing in Hong Kong for seven years. The newly introduced suspension arrangement suspends the payment of stamp duty at the time of the property acquisition, only requiring payment of the relevant amount if the talent does not subsequently become a Hong Kong permanent resident.

Enhance Private and Public Housing

• For private housing, the government will make sufficient land available in the next five years to provide for about 80,000 units.
• For public housing:
• The HKMA will relax the arrangements on mortgage default guarantees for subsidised sale flats (SSFs) to allow purchasers to obtain mortgage loans for a longer period. This will be achieved by extending the current maximum mortgage default guarantee period of the second-hand market from 30 to 50 years.
• In addition to the existing 10 redevelopment projects (providing for around 32,800 units currently in progress or under planning, the Hong Kong Housing Authority (HKHA) will initiate a redevelopment study for one more public housing estate.
• The HKHA will select 10 public rental housing (PRH) estates as pilot sites to trial innovative technologies to assist with daily estate management, such as adopting Internet of Things sensors, AI and mobile devices.
• HKHA will continue to adopt innovative construction technologies, as well as testing and improving the techniques of the Modular Integrated Construction approach in suitable housing projects.

Increase Land and Housing Supply

The government aims to meet housing demands in the coming 10 years and are on track to reduce the average waiting time of PRH to 4.5 years by 2026/27. A number of initiatives are introduced to attain this target:

• More than 2,000 PRH will be completed in the first half of 2024; the first batch of about 2,100 Light Public Housing (LPH) units will be completed in 2024/25, and about 30,000 units will be completed by 2027/28.
• In 2023/24, under the Private Subsidised Sale Flat – Pilot Scheme, three sites will be put up for tender for private developers to develop SSFs, with the first two tender sites providing at least 2,000 units.
• In the next five years, total public housing supply will reach 172,000 units.

Speed up Land Production and Development

The Government will continue to expedite land production to further increase supply of housing:

• Streamlining statutory and administrative procedures (i.e. simplifying straight-forward title-checking procedures; relaxing the gross floor area exemption for aboveground carparks) with an aim to speed up the development process.
• Regularising the arrangement for charging land premiums at a standard rate and extend the arrangement to cover old industrial buildings and agricultural land in the New Territories in phases.
• Adopting Building Information Modelling (BIM) for private development projects to improve building design and speed up construction.

Unleash Land Development Potential

The Government plans to optimise use of existing land through the following initiatives:

• Revitalising Hung Hom Station and nearby sites to create a vibrant harbour front. This will be achieved by upgrading facilities of the Hung Hom Station, releasing commercial and residential floor areas, and enhancing connectivity between Hung Hom and nearby areas.
• Developing the ex-Lamma quarry site by undertaking a study to map out the development direction, with a particular emphasis on senior citizen residential units, residential buildings for talents, and accommodation for personnel involved in recreational training.
• Making use of “Green Belt” areas for recreational and tourism purposes (i.e. exploring the potential development of South Lantau).
• Pursuing mixed development initiatives under the “single site, multiple use” model, with an aim to provide sports, recreational, cultural and social welfare facilities.

Enhancing Efficiency of Urban Renewal

The Government aims to speed up the redevelopment and increase maintenance of old buildings by:

• Implementing the Urban Renewal Authority’s (URA) recommendations for Yau Ma Tei and Mong Kok districts, including the “Nullah Road Urban Waterway” project in Mong Kok East, and the “Street Consolidation Areas” in Yau Ma Tei South in the next five years.
• Focusing on development and having URA to conduct planning studies for Tsuen Wan and Sham Shui Po.
• Enhancing URA’s financial capabilities by providing suitable land for the URA at a nominal land premium to encourage redevelopment projects.
• Lowering the compulsory sale application threshold in a more targeted manner. Apart from considering building age, the need for redevelopment will also be taken into account when determining the applicable threshold.
• Exploring a new mechanism for large-scale redevelopment projects, namely exploring use of the reclaimed land outside the Kau Yi Chau central business district, in order to facilitate implementation of urban renewal projects by both the public and private sectors.

Building Safety and Management

• The Buildings Department (BD) will begin initiating prosecution against Owner’s Incorporations (OCs) or owners who failed to comply with notices served under the Mandatory Building Inspection Scheme.
• In 2024, the Government will put forward proposals to amend the Building Ordinance to increase its deterrent effect. Proposed changes include streamlining prosecution procedures and lowering the prosecution threshold and increasing the penalties for non-compliance with notices served under the Mandatory Building Inspection Scheme and the Mandatory Window Inspection Scheme, repair and investigation orders, and unauthorised building works.
• The Government will also introduce a bill into LegCo to amend the Building Maintenance Ordinance, with a view to strengthen the regulation of OCs in respect of large-scale maintenance projects, and to enhance the transparency and accountability in respect of OCs’ operations.
• The Fire Services Department will also establish a support center by the end of 2023 to provide support in complying with requirements of the relevant legislation on enhancing fire safety of old buildings.

Establishing a Task Force regarding Subdivided Units

• A task force led by the Deputy Financial Security will study the issues of Subdivided Units (SDUs) to improve the conditions and environments of citizens living in SDUs. A report will be made to the Chief Executive after 10 months, with a proposal to recommend minimum standard of living conditions, and put forward solutions, including necessary administrative and legislative proposals to address existing problems.