23 October 2016
About half of land leases in Hong Kong are set to expire in 2047, the same year when a Sino-British agreement related to the city's status will come to an end. Photo: Bloomberg
About half of land leases in Hong Kong are set to expire in 2047, the same year when a Sino-British agreement related to the city's status will come to an end. Photo: Bloomberg

Land lease: It’s not too soon to fret over 2047

With the Legislative Council set to begin a new term on October 1, some freshly-minted lawmakers have begun to focus on a longer-term issue: land lease arrangements in Hong Kong post-2047.

As 2047 will mark the expiry of a treaty that outlines Hong Kong’s freedoms under “One Country Two Systems”, land tenure is among the uncertainties related to the future.

That is because hundreds of thousands of land leases in the city are set to expire at end-June 2047 just as Beijing gains absolute control over Hong Kong.

Theoretically, the government may have the right not to renew the land leases after the expiry date, or charge higher land premiums for renewal.

As there is no clarity on the issue, authorities are facing calls to provide reassurance to the public. 

Among the latest to raise the matter is Professor Edward Yiu Chung-yim, who will represent the architectural functional constituency in the new legislature.

The lawmaker-elect said this week that the government needs to spell out how it plans to deal with land tenure issue, as more than half of the land leases will be affected by the 2047 deadline.

He believes lease renewals and rents may depend on the government’s fiscal situation in the years leading up to 2047. If the government sees a deficit, it could seek higher renewal land premium.

Yiu urged the government to provide assurance on the lease renewal arrangements, pointing out that it will boost the confidence of property buyers, especially those who avail 30-year mortgage loans from banks.

Uncertainty over the 2047 arrangement could affect home values.

Aware of the seriousness of the topic, the government issued a clarification late Tuesday following Yiu’s queries.

“Leases not containing a right of renewal (excluding special purpose leases) may be extended for a term of 50 years without payment of an additional premium, upon expiry and at the sole discretion of the HKSAR government,” the Lands Department said.

Responding to Yiu’s question on the deadline of 2047, the department stressed that 2047 is not a “time limit” for all existing land leases.

Lease extensions or new leases of land with a term of 50 years currently granted by the Lands obviously go beyond 2047, it pointed out. 

While the words offer some comfort, legal experts say the government should table a concrete plan on land lease renewal, applying to all leases that expire in 2047, to settle the issue as soon as possible.

Otherwise, it leaves the door open for authorities to exercise discretionary powers selectively.

Senior Counsel David Tang, in a social media post on Wednesday, noted that the word “discretion” in the government’s statement raises some doubt over 2047 land lease renewal.

He said discretion under British rule meant fair and reasonable decisions that take into consideration all factors. However, when China tightens its grip over Hong Kong, the discretionary powers could be misused to serve political objectives.

“Rule of law” under the Communist Party rule might be completely different from that under Britain. The fears are that Beijing may change the rules of game when the 50-year Sino-British treaty expires in 2047.

Tang has raised valid questions regarding the potential for mischief if the government vests itself discretionary powers in renewal of land lease arrangements.

Entities critical of Beijing could face problems with regard to extension of their leases, as also some foreign companies.

Seen from a wider perspective, 2047 could be a tipping point for Hong Kong’s future, given that the city’s existing governance framework under China was drafted without fully consulting local people.

As Beijing seeks to rein in pro-democracy voices and so-called separatists, land lease arrangements could come in handy to punish those deemed to be opposed to the Communist rule.

Given the track record of the central government and its proxies in Hong Kong, it is not surprising that people are apprehensive about the future. 

Hence, it is good that newly-elected lawmakers have already started focusing on issues related to 2047.

With land lease issue as a starting point, the lawmakers should strive for a broad new deal that will protect Hong Kong’s interests in 2047 and beyond.

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EJ Insight writer

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