15 July 2019
Carrie Lam had shown courage and resourcefulness in dealing with the 'ding huk' issue in the past. Will she continue on that path now and carry out reforms?  This is the question being raised by observers. Photo: HKEJ
Carrie Lam had shown courage and resourcefulness in dealing with the 'ding huk' issue in the past. Will she continue on that path now and carry out reforms? This is the question being raised by observers. Photo: HKEJ

Reforming the Small House Policy

Among all the housing policies currently in force, perhaps the Small House Policy, or the so-called Ding Huk policy, is the most sensitive and complicated one.

It is because the issue not only involves powerful vested interests in the New Territories, it is also because the so-called dings’ rights are seen protected by Article 40 of the Basic Law.

Under the Small House Policy, all male adult heirs of indigenous clans (the “dings”) are entitled to the right of buying a piece of land in designated locations at below market rate and build a house of no more than 2,100 square feet.

Each “ding” is allowed to exercise the right once during his lifetime and the right itself is not transferable.

Article 40 of the Basic Law stipulates that “the lawful traditional rights and interests of the indigenous inhabitants of the New Territories shall be protected by the Hong Kong Special Administrative Region.”

Some members of the public have filed a judicial review lawsuit on whether the ding’s right falls within the category of “lawful traditional rights” stated in Article 40.

Ironically, the potential legal challenge has provided a perfect justification (or excuse) for the government not to deal head-on with the issues arising from the Small House Policy.

From a legal point of view, even if the court does rule in favor of the clans and declare that the ding’s right is guaranteed by Article 40 of the Basic Law, all it will do is prohibit the government from scrapping the Small House Policy, but not reforming it, as long as the reform measures meet the “principle of proportionality”.

But of course in reality, from the political perspective, even if the court rules against the clans and declares that the ding’s right doesn’t fall within the jurisdiction of Article 40, it will prove very difficult for the government to abolish the Small House Policy, for it will certainly provoke a fierce backlash from the powerful indigenous clans.

In my opinion, tweaking or reforming the Small House Policy doesn’t necessarily mean the government and the clans have to square off, as long as it is done skillfully.

To be more precise, in order to reform the Ding Huk policy without touching a nerve among the clans, the administration can target the “house” itself, rather than the ding’s right.

Based on legal and political considerations, first I suggest that the government impose a 10-15 year lock-up period for the resale of small houses, during which owners of the properties aren’t allowed to sell their homes in the open market.

Then second, the government can impose resale restrictions on them, under which small house owners can only sell their properties to other “dings”, who don’t have their own “ding huks”, after the expiry of the lock-up period.

One of the biggest merits of these two measures is that no matter whether the “ding’s right” is protected by Article 40 or not, the initiatives still meet the principle of proportionality, which means they can withstand any judicial review filed by the clansmen.

It is because these reform initiatives won’t deprive, in any way, indigenous clansmen of their right to build and own ding huks. All the new measures do is regulate the resale of these properties, while the sensitive issue of ding’s right is left totally untouched.

The two main goals of these dual reform initiatives are, on one hand, to slow down the pace with which these small houses are circulating and to diminish the size of their secondary market, thereby substantially reducing the profitability of reselling them.

After all, the Small House Policy was initially only intended to meet the housing needs among the indigenous clansmen, not to help them get rich by reselling them.

By enforcing the new measures, authorities can significantly curb the demand for ding huks and reduce the incentives to build them, thus reversing the tide of clansmen turning their small houses into commodities and investment tools.

When Chief Executive Carrie Lam Cheng Yuet-ngor was serving as the permanent secretary for the Home Affairs Bureau in the past, she had the guts to challenge the traditional rights of the indigenous clans, and vowed that the Small House Policy can’t go on like that forever.

After she was promoted to the Chief Secretary post, Lam facilitated the successful conviction of several indigenous clansmen who had allowed real estate developers to use the ding rights to build luxury homes and make huge profits by concluding secret and illicit agreements.

Lam had demonstrated both courage and resourcefulness in dealing with the ding huk issue in the past. Can she now reform the Small House Policy with that same boldness and zeal?

This article appeared in the Hong Kong Economic Journal on July 26

Translation by Alan Lee

[Chinese version 中文版]

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