Time for HK to rethink its old Small House Policy

May 20, 2015 17:50
A survey has shown that most Hongkongers want the government to alter the Small House Policy that favors indigenous male villagers.

Hong Kong's Small House Policy (SHP) has become an extremely contentious issue, with critics arguing that the time has come for the government to jettison the colonial legacy.

The Leung Chun-ying administration, on its part, has been trying to dodge the issue as it fears that any tinkering with the policy might lead to a confrontation with vested interests in New Territories.

But with the housing problem continuing to worsen in the city, pressure is mounting on the government to revisit the SHP scheme, which has been blamed for inefficient use of land resources.

Introduced in 1972, SHP allows an indigenous male villager who is at least 18 years old and who is descended through the male line from a resident in 1898 of a recognized village in New Territories a one-time concessionary grant to build a small house.

When the British government planned to develop new towns in New Territories, it needed the village folk to compromise on some of the government's land arrangements. In exchange for their support, the government had rolled out this SHP as a kind of compensation.

Civic Exchange, a local independent policy think-tank, published a report and a survey Monday, which showed that more than 60 percent of respondents felt that the government should now alter the SHP.

The think-tank believes that there are now 85,600 to 91,700 eligible applicants who have the right to build a small house on their agricultural land without having to pay land premium to the government.

There is a huge gap between the think-tank’s estimation and the 10,000 applicants that the Development Bureau revealed in 2011.

Under the current law, these small houses are restricted to 2,100-square-foot in area and shouldn't be more than three storeys high.

If Civic Exchange is correct, the government needs to give out 11 to 12 square kilometers of land -- equivalent to one-sixth the size of Hong Kong Island -- to fulfill the demand on small houses. 

Since the Lands Department does not keep a list of eligible villagers, village heads have the final say on the credentials of applicants. In this situation, corruption and irregularities can only be expected.

These small houses, or village houses, enjoy strong demand in Hong Kong. Many indigenous residents would cooperate with property developers to develop village house real estate projects.

It is said that it costs around HK$4 million (US$516,000) to build a small house, which can be sold for about HK$10 million in the current market. In this scenario, vested interests have been using their privileges to earn fat profit over the years.

The scattering of village houses in New Territories, given their low-density, clearly does not represent an efficient way to use the scarce land resources. The policy effectively deprives Hong Kong of a chance for better city planning.

Michael DeGolyer, director of the Hong Kong Transition Project and the person-in-charge of the Civic Exchange survey, pointed out that the government has to use all the vacant agricultural land in Hong Kong in order to satisfy the indigenous residents’ demand on small houses.

Given this fact, calls are growing among the general public for a change in the SHP, and the government to show some political courage to do something about the obsolete and unfair policy.

DeGolyer, meanwhile, has suggested that authorities should consider imposing a ban on free transfer of the small houses in order to lower the demand for such properties.

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EJ Insight writer