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Following is a question by the Hon Wu Chi-wai and a written reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (April 13):
Question:
At present, the Government may resume private lands for public purposes pursuant to the relevant legislation, such as the Lands Resumption Ordinance (Cap. 124). In determining statutory compensations in respect of lots/buildings under multiple ownerships, the Lands Department (LandsD) has adopted the practice of assessing the open market value of an individual unit with reference to the use as shown on the approved building plans/alterations and additions plans and the use as permitted under the lease on the date of resumption. For lots/buildings under a single ownership, LandsD considers that the owner concerned will normally choose to redevelop his or her lot(s)/building(s) if redevelopment is proved to be more profitable. In such cases, where redevelopment as a private initiative is more likely to take place, the existing use value and the redevelopment value will be assessed, and the higher of the two values reflecting a more profitable option will be offered as a statutory compensation. Furthermore, the Urban Renewal Authority (URA), established under the Urban Renewal Authority Ordinance (Cap. 563) in May 2001, carries out redevelopment projects in the urban areas of Hong Kong, and the Urban Renewal Strategy (URS) is a government strategy the implementation of which should be undertaken by URA. Regarding the assessment of statutory compensation for resumed properties, will the Government inform this Council:
(1) whether it was the Government's policy to distinguish between single ownership and multiple ownerships in respect of assessment of statutory compensation payable to dispossessed owners of resumed properties (SOMO Distinction) before Cap. 563 came into force in 2001;
(2) whether the authorities have conducted any research or study on SOMO Distinction before its implementation; if they have, of the research or study outcome;
(3) given that there are views that neither Cap. 563 provides for nor the Consultation Paper on Urban Renewal Strategy (published by the authorities in 2001) contains any provisions for the assessment of compensations payable to the affected owners, whether the authorities have assessed if the prevailing assessment principles are inadequate or irrelevant; if they have, of the assessment outcome; given that there are views that the Government or URA should issue guidelines in respect of assessment of statutory compensations in order to avoid confusion and disputes, whether the authorities have plans to issue such guidelines;
(4) given that paragraph 6.2(a) in the Land Resumption and Compensation in the Urban Area - Guidelines for Owners, Occupiers and Surveyors states that, in respect of compensations to owner-occupiers of commercial properties, "[i]n appropriate cases where the redevelopment value for the land resumed is higher than the existing use value as at the date of reversion, the former will be offered as a statutory compensation", whether the authorities used the term "appropriate case" in recognition of the fact that there were exceptions to the established approach of assessing the value of resumed properties; if so, whether there is a policy in place for specifying the circumstances or conditions under which exceptions may apply; and
(5) whether it is the case that the use of the term "appropriate cases" is intended to reserve discretionary powers to be exercised by the authorities; if it is, of the legal basis for such a power?
Reply:
President,
To facilitate the implementation of development projects/schemes by the Urban Renewal Authority under the Urban Renewal Authority Ordinance (Cap. 563) (URAO), the Government may need to resume landed properties. Under section 29 of the URAO, resumption of landed properties to facilitate the implementation of development projects/schemes by URA shall be deemed to be a resumption for a public purpose within the meaning of the Lands Resumption Ordinance (Cap. 124) (LRO). The basis for assessing the statutory compensation payable to owners of landed properties affected by resumptions for implementing URA's development projects/schemes is no different from that for resumptions for other public purposes under LRO.
My reply to the five-part question is as follows:
(1) and (2) According to section 12(d) of the LRO, the value of the land resumed shall be taken to be the amount which the land if sold by a willing seller in the open market might be expected to realise. LRO, together with the applicable common law principles, provides the underlying basis for assessing the statutory compensation payable to the owners affected by resumption. Statutory compensation is based on the open market value of resumed properties, and it is not the Government's policy to distinguish between single ownership and multiple ownership in the assessment of compensation.
Generally speaking, in assessing the statutory compensation (i.e. open market value) of a resumed property within a building in multiple ownership, only its existing use value (EUV) will be assessed. Where redevelopment by the owner is an option (such as when the building is in single ownership), both the EUV and redevelopment value (RDV) will be assessed and the higher of the two values will be offered.
(3), (4) and (5) Statutory compensation is assessed by Lands Department (LandsD) in accordance with the statutory provisions and the applicable common law principles. Section 5 of the "Land Resumption and Compensation in the Urban Area ¡ª Guidelines for Owners, Occupiers and Surveyors" (Guidelines) generally set out the valuation principles and practices adopted by the LandsD in assessing the open market value for resumed properties.
In a typical case, LandsD will negotiate with the claimant and/or the professional appointed by the claimant the amount of statutory compensation. In default of agreement, the claimant may refer the case to the Lands Tribunal for a determination in accordance with section 6(3) of the LRO and any costs or remuneration reasonably incurred or paid by the claimant in employing persons to act in a professional capacity in connection with such offer or claim under section 6(2A) and section 8(4) of the LRO would be reimbursed. The procedure is comprehensively set out and explained in the Guidelines which is accessible from LandsD's website and provided to all affected owners and occupiers for their information.
The term "appropriate cases" stated in paragraph 6.2 of the Guidelines refers to cases where redevelopment is an option and RDV can be realised, which is applicable when the owner can have complete control of the lot.
Ends/Wednesday, April 13, 2016
Issued at HKT 15:10
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