To address the urgent need to promote urban redevelopment through private sector initiatives, the Land (Compulsory Sale for Redevelopment) (Amendment) Ordinance 2024 was passed on 18 July 2024 and is set to take effect on 6 December 2024. This ordinance aims to expedite the redevelopment of aged and dilapidated private buildings, tackle the safety risks posed by old buildings and improve living conditions for residents.

The amendment introduces four key changes to the existing compulsory sale regime under the Land (Compulsory Sale for Redevelopment) Ordinance (Cap. 545), which include reducing the thresholds required for compulsory sale applications, enabling the submission of applications for multiple adjoining lots, simplifying the legal procedures involved in the compulsory sale process, and providing better support for minority owners impacted by these sales.

Key changes

Reducing the thresholds required for compulsory sale applications

The amendment lowers the ownership percentage required to initiate a compulsory sale application. The threshold for buildings aged 50 to 59 years in designated areas is reduced from 80% to 70%. For those aged 60 to 69 years, it is further reduced to 65%. The introduction of designated areas, namely (i) Cheung Sha Wan, (ii) Ma Tau Kok, (iii) Mong Kok, (iv) Sai Ying Pun and Sheung Wan, (v) Tsuen Wan, (vi) Wan Chai and (vii) Yau Ma Tei, are identified considering the number of buildings aged 50 or more in the area and the number of buildings issued with notices under the Mandatory Building Inspection Scheme, which are reviewed regularly.

In non-designated areas, the threshold is reduced to 70% for buildings aged 60 to 69 years. For buildings aged 70 years or more, it is reduced to 65% regardless of area. As for industrial buildings more than 30 years old in non-industrial regions, the threshold is decreased from 80% to 70%.

Facilitating multiple adjoining lot applications

The amendment allows for the amalgamation of two or more adjoining lots for joint redevelopment, even if the buildings are not connected by a common staircase. This change aims to prevent inefficient "pencil-like buildings" and promote comprehensive redevelopment projects. Previously, the compulsory sale regime required meeting the application threshold for each lot individually, except when buildings were connected by a common staircase. The new provision permits averaging ownership across adjoining lots to meet the threshold, facilitating joint redevelopment. Specifically, an application can now cover multiple lots, including those that are staircase-connected, adjoining, or a combination of both, provided they form a cluster of lots bound by a continuous boundary. This includes the possibility of covering additional lots if they meet certain criteria, such as being part of a specified class of lots and having a majority ownership of at least 65%. Additionally, it clarifies that a compulsory sale application can cover multiple lots, even if some are wholly owned by the majority owner.

Furthermore, the amendment introduces specific requirements for the redevelopment of these lots, ensuring that they are redeveloped in a manner that forms one cohesive site or part of one site. This includes obtaining necessary approvals and consents from the Building Authority to commence building works in accordance with approved plans.

Streamlining the legal process of compulsory sale regime

The amendment introduces a fast-track procedure for the Lands Tribunal to decide on granting an order for sale, dispensing with the requirement to justify redevelopment based on the age or state of repair of the buildings if they are at least 50 years old and all minority owners have submitted a Notice of No Objection, indicating that the Tribunal is not required to consider whether redevelopment is justified on grounds of age or condition of existing buildings. The government, as a minority owner holding undivided shares as bona vacantia, is deemed to have filed a Notice of No Objection. The process of compulsory sale could be expedited if the Lands Tribunal is satisfied that the majority owner has taken reasonable steps to acquire all the undivided shares in the lot.

Enhancing support to affected minority owners

The amendment includes provisions to offer better support and protection for minority owners. This includes allowing owner-occupiers to continue occupying their property for up to six months after the sale, provided they pay rent to the purchaser. Additionally, to coordinate and steer the follow-up work after enactment of the ordinance, the government’s Development Bureau has established the Dedicated Office of Support Services for Minority Owners under Compulsory Sale (DOSS) ¹and the Support Service Centre for Minority Owners under Compulsory Sale (SMOCS)²to provide one-stop support services and encourage mediation of disputes.

Conclusion

This 2024 amendment is expected to boost compulsory sale applications, supporting the government’s goals of accelerating urban renewal and boosting land supply by redeveloping aging buildings, improving living conditions, and stimulating private sector investment. This legislative change will transform Hong Kong’s urban landscape, leading to more efficient land use, safer environments, and a rejuvenated cityscape, distinguishing Hong Kong from jurisdictions like Singapore with higher application thresholds.³

Acknowledgements to Trainee Solicitor Karen Lee for research and contribution to this article.

1. Dedicated Office of Support Services for Minority Owners under Compulsory Sale
2. Support Service Centre for Minority Owners under Compulsory Sale commences operation
3. In Singapore, the Land Titles (Strata) Act 1999 specifies that: For properties less than 10 years old, at least 90% of the owners must agree to the collective sale. For properties 10 years old or older, at least 80% of the owners must agree to the collective sale.