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The Extension of Government Leases Bill (the Bill) formulated by the Government was passed by the Legislative Council (LegCo) and came into operation on 5 July 2024. The simplified arrangement for lease extension manifests the solid safeguards for the long-term prosperity and stability of Hong Kong under the steadfast and successful implementation of “One Country, Two Systems”. The Government’s clear policy stance on lease extension gives assurance to property owners and investors. The simplified arrangement provides convenience and facilitation to the public and businesses. This new piece of legislation creates more favourable conditions for the HKSAR Government to focus its efforts on pursuing economic growth and development and improving people’s livelihood. This time, I have invited a colleague from the Development Bureau (DEVB) to introduce this important legislation. LegCo members and representatives of the business, banking and surveying sectors, as well as a property owner, will also share their views.

Clear and unequivocal land policy made in 1997

Miss Polly CHONG, Principal Assistant Secretary (Planning and Lands) of DEVB, states that a land lease is a contract between the Government and the owner that sets out the terms and conditions, and the period for using the land. As land leases underpin the land and property of the public, a clear lease extension arrangement is very important for people’s livelihood, business operations and the economic development of Hong Kong. As she points out, the HKSAR Government promulgated a clear land policy in July 1997 under which leases for residential, commercial and industrial uses are generally extended by the Government for a term of 50 years without payment of an additional premium, subject to an annual rent equivalent to three per cent of the prevailing rateable value of the property.

Handling the significant number of upcoming expiring leases in a more efficient and orderly manner

The newly enacted Extension of Government Leases Ordinance (the Ordinance) has simplified the means of lease extension. The Director of Lands will extend leases by publishing an “Extension Notice” six years before the expiry of each batch of leases. Owners no longer have to sign a new land lease with the Government as in the past. The encumbrances, interests and rights (such as mortgages) under the original lease will be carried forward to the extended lease.

With the new piece of legislation, the significant number of leases expiring from 2025 onwards can be handled in an efficient and orderly manner. On the commencement date of the Ordinance, i.e. 5 July 2024, the Lands Department already published the first “Extension Notice”, covering leases expiring between that day and the end of 2030. These leases, involving a total of 376 lots, are all extended.

Upholding the land policy and extending general purpose leases for a term of 50 years

Hon Jeffrey LAM, Chairman of the LegCo Bills Committee on the Bill, says that in the course of scrutiny of the Bill, the Government has time and again reiterated that the Ordinance does not change the land policy promulgated in July 1997 which has all along been upheld by the Government, nor will the Ordinance affect the Government’s sole discretion in extending a lease. Leases for commercial, residential and industrial uses will generally be extended upon expiry for a term of 50 years without payment of an additional premium, subject to an annual rent to be charged. This brings assurance to the business sector and the public.

As the Chairman of the Bills Committee, Hon Jeffery LAM says that he is pleased to see the smooth passage of the Bill by the LegCo. The Bills Committee held a total of seven meetings with the Government. Members of the Bills Committee offered numerous constructive suggestions on the Bill, many of which were adopted by the Government.

Collecting a wide spectrum of views on streamlining lease extension procedures to bring convenience and facilitation to the public and businesses

LegCo members across sectors expressed support for the Ordinance during the Second and the Third Readings of the Bill. As pointed out by Hon Andrew LAM (Election Committee constituency), according to government information, leases of around 300 000 lots will expire on 30 June 2047, involving over 1.5 million owners. If lease extension were to be handled under the conventional mechanism, the Government would need to sign a new lease with each and every owner through contractual means, requiring massive manpower resources. As such, it is necessary to enact a new piece of legislation for handling the extension of general purpose leases in a comprehensive manner.

Hon Doreen KONG (Election Committee constituency) describes the Ordinance as the most convenient means of handling lease extension. It is not necessary for property owners whose leases are to be extended to sign any new instruments. Under the Ordinance, the Government can effect lease extension by way of gazettal, which is indeed a good policy that benefits the public. She adds that the government officials of DEVB have paid heed to Members’ views throughout the scrutiny of the Bill, taken various suggestions on board and proposed amendments to the Bill. This shows great collaboration between the Members and the Government.

Hon Louis LOONG Hon-biu (Real Estate and Construction constituency) welcomes the enactment of the Ordinance, which provides a simple and orderly way for extending leases in batches. It obviates the need for owners to undergo cumbersome procedures of executing lease documents with the Government individually.

The Ordinance to help enterprises thrive and stabilise mortgage business

Dr Allan ZEMAN, Chairman of Lan Kwai Fong Group, welcomes the enactment of this important piece of legislation. It signifies the Government’s commitment to upholding the 1997 Land Policy, which has provided a solid foundation for Hong Kong to develop and prosper. The new Ordinance allows the Government to extend leases by publication of gazette notices, without requiring owners to sign any contract documents with the Government or perform any other formalities. It showcases the Government’s effort to cut red tape and bring convenience to the public and enterprises. This supportive mindset of the Government is exactly what Hong Kong needs for businesses to flourish and new investors to come.

Mr Derek NG, representative from the Hong Kong Association of Banks (HKAB) Chairman Bank and General Counsel, Hong Kong, HSBC, says that the HKAB is delighted to learn of the passage of the Ordinance. To the banking sector, a clear and certain arrangement for lease extension is particularly important for mortgage management business. HKAB is pleased to see that the Government has addressed the banking sector’s views by advancing the publication of the Extension Notice to six years before lease expiry. This has positively responded to stakeholders’ appeal for early certainty on lease extension.

Mr Derek NG considers that the Ordinance clearly provides for the encumbrances and rights under the original leases to be carried forward, doing away with the complex procedures for owners to negotiate with banks for transfer of mortgage from the original lease to the new lease, thus greatly reducing the hassle for both the banks and the owners.

Standard extension clauses stipulated in the Ordinance to boost confidence across sectors

Sr Francis LAM, President of the Hong Kong Institute of Surveyors, welcomes the Ordinance, saying that the Ordinance clearly spells out the standard clauses for lease extension, viz. extension for a term of 50 years for all applicable leases without payment of an additional premium. Owners do not need to worry that the valuation of their properties would be affected by the lease term. He adds that the introduction of the Ordinance not only provides assurance for people to live and work in Hong Kong, but also enhances the confidence of the industrial, commercial, investment and banking sectors in understanding the continuity and certainty of the land policy of Hong Kong.

New Ordinance to facilitate lease extension and make owners relieved

The Belcher’s, situated in the Central and Western District, is one of the residential estates included in the first batch of leases extended under the Ordinance. Ms Alice CHEUNG, Chairman of the 11th Owners’ Committee (OC) and member of the 6th to 8th OC of The Belcher’s, says that owners no longer need to sign any instruments with the Government under the new mechanism of lease extension. Property mortgages, Deed of Mutual Covenant, Owners’ Corporation and Owners’ Committee can be carried forward without being affected. Describing this as wonderful news, she believes that most of the owners would be glad and relieved because owners no longer need to take any action for lease extension to take effect.

DEVB is grateful for the wide support from all sectors of the community for the new Ordinance. We will keep up our efforts on promotion and education to let more people know about the new lease extension mechanism and the convenience that it brings to the public and businesses.