Fraud prosecution signals shift on Small House Policy

January 06, 2016 15:46
The Small House Policy has been controversial for years, as many Hongkongers believe it gives preferential treatment to indigenous villagers in the New Territories. Photo: HKEJ

A property developer and 11 villagers were sentenced to jail last month for defrauding the government by entering into secret deals involving land rights under the Small House Policy.

The convictions were the first in Hong Kong’s history related to the policy -- which allows a male indigenous villager in the New Territories aged 18 or above to build a three-story house with a footprint of up to 700 square feet in a location approved by the government.

Such a house is commonly known as a ding uk, or "man's house".

The case immediately drew a backlash from the indigenous population in the New Territories, and relations between the rural council that represents them, known as the Heung Yee Kuk, and the government have hit a record low.

The Small House Policy was introduced by the former colonial government in 1972 in an attempt to improve the availability of suitable housing in the New Territories.

However, since the supply of land has lagged far behind the growth in the population of indigenous male villagers over the years, many of them have ended up without the land to build their houses.

At the same time, there are some developers that own a lot of land in the New Territories but are unable to build houses on it because much of the land has been designated for other purposes by the Town Planning Board.

To bypass the TPB, the developers came up with an ingenious solution: they provide land to indigenous villagers, who then each apply to the Lands Department for approval to build a ding uk.

When the house is completed, the villager -- who invariably already has his own accommodation -- will sign an agreement with the developer who supplied him with the land, transferring the ownership of the house to the developer.

The developer puts the house up for sale in the open market and pays the villager a sum of money for his role in the subterfuge.

Each of the 11 villagers who were convicted of fraud reportedly received between HK$130,000 (US$16,772) and HK$250,000 from the developer.

Now, the sale of land rights by indigenous villagers to private developers has been a common practice in the New Territories for decades.

However, in the recent case, the 11 villagers were found guilty of fraud because they made false claims that they were landowners to obtain building licenses from the government.

After the sentencing, the kuk vowed to file an appeal, media reports said, citing a letter sent by the then secretary for development, Carrie Lam Cheng Yuet-ngor, to the kuk's then chairman, Lau Wong-fat, in 2007, which reassured kuk members that the practice does not constitute a criminal offence.

It boggles the mind that Lam would make such a promise, because it is up to the Department of Justice, rather than the Development Bureau, to decide what is against the law and what is not.

The prosecution against the 11 villagers indicates a radical departure of Chief Executive Leung Chun-ying’s administration concerning the Small House Policy from the previous government under Donald Tsang Yam-kuen.

Tsang chose to turn a blind eye to the collaboration between indigenous villagers and developers, because he didn’t want to antagonize the powerful kuk.

However, Leung is taking a tough stance on the issue, because he regards land as the most valuable and sought-after resource in Hong Kong and is determined not to allow anybody to take advantage of the loopholes in our laws that govern the use of land.

Seizing this opportunity, some members of the public who disapprove of the Small House Policy have filed a request for a judicial review with the High Court demanding the abolition of this policy, which on the face of it gives indigenous villagers in the New Territories preferential treatment over other Hongkongers.

It seems the Heung Yee Kuk, which has vowed to defend indigenous interests at all costs, has its work cut out for it.

This article appeared in the Hong Kong Economic Journal on Jan. 4.

Translation by Alan Lee

[Chinese version 中文版]

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