Small House Policy II: An Update

April 2013 Mandy Lao Man-lei About Civic Exchange

Civic Exchange is a Hong Kong-based non-profi t public policy think tank that was established in October 2000. It is an independent organisation that has access to policy-makers, offi cials, businesses, media and NGOs – reaching across sectors and borders. Civic Exchange has solid research experience in areas such as air quality, energy, urban planning, climate change, conservation, water, governance, political development, equal opportunities, poverty and gender. For more information about Civic Exchange, visit www.civic-exchange.org.

About the author

Mandy Lao Man-lei is a Project Manager at Civic Exchange. She graduated from Cardiff University with a masters degree in City and Regional Planning, (specialised in urban and built environment). Mandy has rich experience in directing and managing social and policy research projects. She is the co- author of the Rethinking the Small House Policy published by Civic Exchange in 2003. Her major research interests include urban built environment, public space design, community planning and sustainable development.

2 Preface & acknowledgements

In 2003, Civic Exchange embarked on research to review the Small House Policy in Hong Kong and to identify associated problems and the way forward. The research project was the fi rst attempt by anyone to deconstruct the policy from a public policy angle with the hope of stimulating community deliberation in a rational manner.

In the last decade, the administration has taken no action to address the issues related to the Small House Policy in Hong Kong, except that a review was initiated and a number of new procedures were implemented. Civic Exchange initiated another review of the policy in 2012 and this report represents the results.

This report gives an overview of the development of the Small House Policy in the past decade, identifi es confl icts of interests among different parties including the HKSAR Government, and articulates the critical issues arising from the implementation of the policy. The Small House Policy has been under the spotlight in recent months. This report also captures the discussions and highlights the broader issues involved. It serves as a reminder to readers that the Small House Policy is an issue not only related to land rights and land use, but also related to conservation, city planning, and the legal, political and historical nexus of Hong Kong.

We thank Mandy Lao, the author of this report, for her efforts in mapping out and unveiling the current status of the Small House Policy in Hong Kong. We are grateful to the WYNG Foundation for supporting this research project. We also benefi ted from the insights contributed by the following individuals: Stephen Brown, Loretta Ho, Lisa Hopkinson, Mike Kilburn, Alice Lai, Camille Lam, Samson Lee, Alan Leung, Christine Loh, Simon So, and Paul Zimmerman.

We thank the Lands Department, Fire Services Department, and Planning Department for responding to our enquiries. We would also like to thank Bill Leverett for editing the English version of the report; Pauline Poon for translating the report into Chinese; and DESIGNNORM for designing the report cover and laying out the report.

Yip Yan-yan Chief Executive Offi cer

April 2013

3 Table of Contents

Executive Summary ...... 5

1. Background ...... 7

2. Policy Update (2003-2012) ...... 9 2.1 New procedures to streamline the process of small house applications 2.2 Preventing prior arrangement for transfer or disposal of small house applicant’s interest 2.3 Fire safety arrangements 2.4 Village Expansion Area

3. Current Status of the Policy Implementation ...... 12 3.1 Small house application cases 3.2 Number of small houses and land area involved 3.3 Applications for premium assessment 3.4 Eligible indigenous villager population

4. Problems Associated with Small House Policy Implementation ...... 15 4.1 Absence of interpretation of traditional rights 4.2 Discriminatory nature of the policy 4.3 Eligibility for small house grant 4.4 Policy administration 4.5 Property speculation 4.6 Planning 4.7 Unauthorised building works 4.8 Land resources 4.9 Environment 4.10 Governance issues

5. Perception of Stakeholders ...... 27 5.1 Government 5.2 Heung Yee Kuk 5.3 Indigenous villagers 5.4 Non-indigenous residents 5.5 Politicians 5.6 Green groups 5.7 Professionals and academics 5.8 General public

6. Discussion and Recommendations ...... 34 6.1 Constitutional issues 6.2 Corruption and property speculation 6.3 Planning 6.4 Land resources 6.5 Environment 6.6 Governance 6.7 Overall

Appendix ...... 40

Endnotes ...... 41

4 Executive Summary

The Small House Policy (SHP), originally introduced as a temporary measure to address housing needs of indigenous villagers in the New Territories, has been in place for 40 years. However, the policy has been criticised as unsustainable and outdated while debates over the abuse of the small house grant have become one of the most challenging issues facing the administration.

In 2003, the Civic Exchange report, Rethinking the Small House Policy, identifi ed numerous problems associated with its implementation. An offi cial review of the policy was initiated in 2002. However, it has been described as ongoing for over a decade without signifi cant progress, and new measures have been introduced which actually exacerbate the problems. The ongoing “review” has become an excuse for taking no action by the government in response to political pressure and public concern over unauthorised building works (UBWs) and other issues related to the SHP in recent years.

This paper provides an update of the policy over the past decade (2003-2012); identifi es remaining problems and confl icts between different stakeholders, which consist of the government, the Heung Yee Kuk (HYK), indigenous villagers, non-indigenous residents, politicians, green groups, professionals and academics, as well as the general public; and fi nally suggests a way forward.

The key changes to the administration of the policy since 2003 include the introduction in 2006 of new procedures to streamline the processing of small house grant applications to reduce the long waiting time, Interim Criteria in 2007 to streamline small house applications to the Town Planning Board (TPB), and relaxation of Emergency Vehicular Access (EVA) requirements in 2007.

When updating the policy implementation status, it was found that the publicly available fi gures are inconsistent and fragmented with no regular update.

The critical issues arising from the implementation of the policy over the past decade include:

Absence of interpretation of traditional rights – there is no legal certainty on whether indigenous villagers’ rights under the SHP (the “ding” right) can be understood as “lawful traditional rights and interests” under the Basic Law.

Discriminatory nature of the policy – the SHP is regarded as discriminatory to both female indigenous villagers, and to non-indigenous Hong Kong people who are not entitled to apply for a small house grant.

Eligibility for small house grant – the Lands Department does not keep a list of eligible indigenous villagers who are entitled to the small house grant, and only village heads have the authority to verify the indigenous status of applicants, creating a situation conducive to dishonesty and irregularities.

Policy administration – indigenous villagers were frustrated by the long processing time of small house applications, some of which were over ten years. At the end of 2011, there was a backlog of 10,255 small house applications.

5 Property speculation – the indigenous villagers have been able to profi t from their land grants, by selling their small houses or “ding rights” to outsiders.

Planning – lack of comprehensive development plans and statutory plans has caused suburban sprawl across rural areas, bringing numerous unfavourable impacts to village environments. The Interim Criteria adopted by the TPB in 2007 relaxed planning controls on land adjacent to Village Type Development (V) zones, leading to uncontrollable sprawl of village houses in virgin land adjacent to villages.

Unauthorised building works – the enforcement approach to UBWs appeared to be more lenient towards illegal structures on small houses compared to other urban buildings, giving an impression that small house owners were privileged.

Land resources – the fundamental unsustainability of the policy is caused by unlimited demand but limited supply of land for housing. In practice, land for small house development has been increased by expansion of village areas and rezoning green belt land, giving planning approval for small house development outside V zones, illegal destruction activities that convert rural lands to “possible” development sites, and unlawful occupation of government land.

Environment – haphazard development of small houses has caused signifi cant adverse effects on the natural environment while large-scale exploitation of land for building village houses has been irreversibly damaging to some ecologically valuable habitats.

Governance issues – the political infl uence of the HYK is demonstrated by their votes in the Legislative Council (LegCo) and the Chief Executive Election Committee. New measures introduced by the previous administration were criticised as giving political favour to the HYK in return for their votes. There is no pragmatic progress, action plan or time frame for taking forward the review, while lack of coherence in the overall administration, and undefi ned responsibility between departments goes unresolved.

To address the issues, the government could improve the administration of the policy by producing a comprehensive zoning plan for the whole of the rural New Territories and formulating rural planning policies, undertaking detailed investigations to verify indigenous villagers’ claims, introducing a moratorium clause on the removal of the restriction on alienation from the conditions of small house grants, keeping up-to-date fi gures on land availability, developing a reliable mechanism for estimating demand for small houses, reviewing the Interim Criteria and examining the environmental impacts of small house development, undertaking a farmland survey and recording aerial photos of rural land, executing better monitoring of occupation of government land, establishing a data bank to keep track of environmental destruction activities, as well as resolving the overlap between departments and clarifying misconceptions about planning, lands and building regulations and enforcement.

In addition to better administration, a way forward for the government to fundamentally resolve the unsustainable nature of the policy would be initiating public debates and forums, setting a timetable for the review, and recommending changes to the policy after consultation with all interest groups. To eliminate the discrepancy in the interpretation of Article 40 of the Basic Law, the government should actively consider seeking a court’s interpretation of the Article when there is a lawsuit involving the issue of tradition rights of indigenous inhabitants. 6 1 Background

A temporary The Small House Policy (SHP) was introduced in 1972 by the Executive Council measure for (ExCo) and “allows male indigenous villagers to apply for permission to erect male indigenous for himself during his lifetime a small house1 on a suitable site within their villagers to apply own village”2 (i.e. small house grant). The policy was originally introduced building a small as a short-term measure. The stated aims of the SHP were to simplify rules, house in their making it easier for a villager to apply for permission to erect a small house, own village and making it possible for houses in rural areas in the New Territories to be constructed to a higher health standard.3 The policy, which was worked out and implemented in about six weeks, addressed the provision of land for building and the defi nition of a “village type house”.

At the time it was emphasised to the Heung Yee Kuk (HYK) that “if the scheme was abused, we should scrap the whole thing.”4 A working group was set up between the administration and the HYK for ongoing implementation of the policy.

Problems The policy has been in place for 40 years. However, numerous problems associated with associated with its implementation have remained unresolved. In 2003, the implementation Civic Exchange report, Rethinking the Small House Policy, identifi ed problems of the SHP including: identifi ed in • Fundamental unsustainability of the policy itself – the limited supply Rethinking the of land in village areas cannot meet the open-ended demand for small Small House houses. Policy • Abuse of the policy by indigenous villagers who cash in on the eligibility for concessionary grants, leading to speculative development of small houses and corruption. • Lack of planning in village areas results in haphazard development of small houses and rural sprawl – loss of vernacular architecture and character of the recognised villages and erosion of landscape features. • Threats to the environment and ecology caused by the ad hoc erection of small houses within areas of feng shui woodland, streams, green belts, and conservation sites. • Drainage and water quality problems in village areas caused by improper and inadequate sewage treatment associated with small houses. • Discriminatory nature of the policy – discrimination against female indigenous villagers who are not entitled to apply for a small house grant and discrimination against non-indigenous Hong Kong people who do not have the same privileges extended to them as indigenous villagers.

Government’s An offi cial review of the policy was promised by the administration in 2002 actions in in response to the release of an Audit Commission report on the SHP,5 while response to the comprehensive consultation on the existing policy has been repeatedly problems mentioned in the successive Policy Address of the Chief Executive. However, no signifi cant progress has been reported and indeed new measures have been introduced which actually exacerbate the problems. These include the introduction of new procedures to streamline the processing of small house grant applications in 2006 to reduce the long waiting time, and relaxation of Emergency Vehicular Access (EVA) requirements in 2007.

7 With rising concerns about unauthorised building works (UBWs) in New Territories Exempted Houses (NTEHs)6 as well as increasing public interest in rural land use and planning issues in recent years, the SHP has again been put on the table. In the Chief Executive Election Forum held in December 2011, the four candidates were asked about their visions for urban development of Hong Kong and comments on UBWs and the SHP.

UBWs in the New In response to a report on UBWs in NTEHs released by the Ombudsman in Territories April 2011,7 the administration launched a new publicity campaign entitled “Village Houses without unauthorized building works put your mind at ease” in November 2011 to illustrate the existing policy enforcement against UBWs in NTEH and introduce a new reporting scheme for UBWs.

Problems and Although the administration has tried to respond to the indigenous confl icts remain villagers’ concerns with the SHP, they have not addressed the many problems unsolved but caused by the policy, and the discrepancies between the interests of the growing pressure indigenous villagers and the interests of the wider community have not yet to seek a way been reduced. The fundamental confl ict between the SHP and long-term forward planning remains. With increased public desire for a better quality of life and making Hong Kong a more livable city, there will be growing pressure to seek a way forward. Civic Exchange considers that “any policy decision that is made should be done through open and public debate based on complete and accurate information”. 8 Civic Exchange’s previous report on the issue provided a comprehensive review of the SHP and its related issues in order to facilitate a rational discussion of the policy. This paper provides an update of the policy over the past decade (2003-2012), identifi es remaining problems and suggests a way forward.

8 2 Policy Update (2003-2012)

Changes to the A detailed description of the background and history of the SHP can be found administration in the 2003 publication. The following describes changes to the administration of the policy of the policy since that time. Figure 1 shows the administrative procedures for between 2003 granting small house applications. If a genuine villager had no land, he could be and 2012 granted a piece of land within his village or its environs at low price by Private Treaty Grant (PTG). If a villager owned suitable land, he could be given a Free Building License to build a “village type house” without paying a premium. If a villager owned land which was not suitable, he could exchange the land with the government at a discounted price. In addition, all small house grants contain restriction clauses on alienation (i.e. the transfer of property ownership). The restriction period on alienation is different for different types of small house grants, as summarised in Table 1 below:

Table 1: Restriction on alienation for different types of small house grants 9 Type of small Operative Removal of house grant period of restriction restriction Within years 1 to 3 Within years 4 & 5 After 5 years Building licence 5 years Permitted, but Same as years No restriction upon the payment 1 to 3 of full market value premium (a discounting factor is applied) Land exchange 5 years Permitted, but Same as years No restriction upon the payment 1 to 3 of full market value premium (a discounting factor is applied) PTG (Village Perpetual Not permitted, Permitted, but Same as Expansion Area because of the upon the payment years 4 to 5 scheme) moratorium during of full market the fi rst 3 years value premium Other PTGs Perpetual Permitted, but Same as years Same as upon the payment 1 to 3 years 1 to 3 of full market value premium

2.1 New procedures to streamline the process of small house applications

2.1.1. Shorten processing time of straightforward cases Process of In response to indigenous villagers’ concerns about the long processing time straightforward for small house applications, a new set of procedures was introduced by Lands cases could be Department in 2006 to streamline the process by classifying applications into completed within straightforward and non-straightforward categories at an early stage.10 For 24 weeks a straightforward case, the process could be completed within 24 weeks from the date of interview to the date of execution. For a non-straightforward case, the applicant needs to resolve those problems within a period of 12 months before his application can be further processed. If the applicant fails to resolve the problems, the application will be rejected. The Lands Department takes the

9 Figure 1: Current Procedural Flow Chart Processing of Small House Applications by New Territories District Lands Offi ce

Receipt of Composite Application Form

Screening

Interview Applicant

Checking Eligibility and Land Status

Site Visit to Ascertain Suitability of the Site Proposed and Record Findings in File

Consultation Consideration of Reject Application with Relevant Adverse Comments with Reasons Government Offi ces

Posting of Notices (giving 14 days for local objections if any)

Submission to District Lands Offi ce Conference (DLOC)*

Issuing of Preparation of Preparation Checking of Title Small House (for exchange Offer Letter of Licence/Grant Documents Plan only)

Execution of Small House Documents

*Straightforward cases to Chief Land Executive Source: “Processing of Small House Applications and Review of the Small House Policy”. Legislative Council Panel on Planning, Lands and Works. February 2006. 10 lead in handling all received objections. Under the new procedures, the Lands Department can process at least 2,300 cases per year while the waiting time for processing all new application should not be exceeded for a year.11

Straightforward cases are those for which the applicant’s indigenous status and eligibility for a small house grant is confi rmed, the proposed site for a small house development is found to be suitable after consulting relevant departments, and no objection to the application is received after a notice is posted in the village. All cases that cannot meet the criteria of straightforward cases will be treated as non-straightforward cases.12

2.1.2. Interim criteria adopted for small house applications Those small Since September 2007 Planning Department have also adopted a measure to houses with less streamline small house applications to the Town Planning Board (TPB). The than 50% of the applications should be assessed in accordance with new Interim Criteria,13 under house footprint which favourable consideration would be given to proposed small houses with outside the V only a minor portion, i.e. less than 50% of the house footprint, falling outside zone is exempted the Village Type Development (V) zone boundary.14 According to an explanation from planning made by Planning Department, this type of application was exempted from the permission need for planning permission because of the high approval rate of similar cases in the past. However, the exemption does not “apply to sites encroaching on conservation-related zones, Country Park, Green Belt zone if any tree felling is involved, Road zone and water gathering grounds”.15

2.2 Preventing prior arrangement for transfer or disposal of small house applicant’s interest

As restated by the Housing, Planning and Lands Bureau in 2007, applicants should have no prior arrangement for transfer or disposal of the applicant’s benefi cial interest in the land under application, according to the requirements of lease conditions of a small house grant.16

2.3 Fire safety arrangements

Relaxation of the A set of new fi re safety arrangements has been implemented since requirement for 1 July 2006,17 which relaxes the requirement for provision of an EVA provision of an associated with a small house application. If a small house application site EVA is located less than 30 metres away from an existing EVA, or if a cluster of fewer than 10 houses (including the application site) is located within a radius of 30 metres from the application site, or if an EVA cannot be provided to the site because of geographical constraints or problems with private land ownership, provision of an EVA is not required, but at least one fi re safety alternative, i.e. automatic sprinkler installation, fi re detection system and hose reel system, or fi re detection system and fi re extinguisher, must be implemented instead.18

2.4 Village Expansion Area

The VEA19 scheme has been put on hold pending the review on the SHP. According to the fi gures for 2007, 36 VEAs have been developed since the introduction of the scheme in 1981, providing a total of 1,962 sites for building small houses.

11 3 Current Status of the Policy Implementation

Inconsistent Although the SHP has been in place since 1972, the publicly available fi gures and fragmented showing the status of policy implementation are inconsistent and fragmented. fi gures with no There is no regular and systematic update of the statistics available to the regular update public while much signifi cant data remains unknown. To better understand the policy implementation over the past decade, this paper has pieced together fi gures provided in numerous meeting documents and press releases of the government. However, there remain a number of gaps.

3.1 Small house application cases

3.1.1. Applications within V zone or Village Environs (VE) zone According to statistics provided by the Secretary for Development, a total of 36,912 small house application cases were approved by the Lands Department between 1972 and the end of 2011. Applications that were being processed or pending processing by the end of 2011 were 6,895 and 3,360 respectively.20 The numbers of small house applications processed by the Lands Department between 2002 and 2011 are shown in the Appendix, Table 1. These suggest that there have been 7,329 applications approved between 2003 and 2011.

3.1.2. Applications outside V or VE zone A total of 595 planning applications relevant to small house development were processed by the TPB between 2007 and the end of 2011, of which 413 cases had been approved, a success rate of nearly 70%.21 Figures of small house-related applications processed by the TPB between 2007 and 2011 are shown in the Appendix, Table 2.

3.2 Number of small houses and land area involved

There are a total of 642 recognised villages approved by the Lands Department for small house development. The government’s data on the total area of land available or allocated for small house development is ad hoc and inconsistent, and there has been no systematic attempt to compile accurate statistics since the policy was introduced.

In 2012, the Planning Department noted that about 3,147 hectares of land has been zoned V zone on statutory town plans for the rural areas in the New Territories with the intention of reserving land for development of small houses by indigenous villagers, and concentrating village type development within this zone for development in a more orderly manner, with effi cient use of land and provision of infrastructure and services.22

12 According to an estimation conducted by the Lands Department years ago, the total land covered by the VE and V zones is about 4,960 hectares, of which about 1,620 hectares is available for small house development. However, the administration has no further estimation of the exact number of small houses that could be built within these 1,620 hectares because various physical constraints might restrict the feasibility of building small houses in the VE or V zones.23

The Secretary for Development recently indicated that there are 1,201 hectares of unleased and unallocated government land in the V zone, after excluding roads/passageways, man-made slopes and land allocated under the Simplifi ed Temporary Land Allocation (STLA) procedures, 932.9 hectares of land are reserved for development of New Territories small houses under the prevailing SHP. 24

Table 2: Different estimates of land available for small house applications within V and VE zones Land area description Land area (ha) Source of information (1) VE + V zoned land 4,960 Secretary for Development 11/1/2012

(2) VE + V zoned land available 1,620 Secretary for Development for small house application 11/1/2012 (including land with development constraints) (3) Total V zoned land 12/3/2012 3,147 Director of Planning (4) Government land within V 1,201 Secretary for Development zone reserved for small house 17/10/2012 development (including land with development constraints) (5) Government land within V 932.9 Secretary for Development zone reserved for small house 17/10/2012 development (excluding land with development constraints) (6) Private land within V and VE 419 Difference between (2) zones and (4) (7) Private land within V zone Unknown but See above excluding land with suitable for small house < 419 development constraints development

3.3 Applications for premium assessment

When an indigenous villager sells his small house within the restriction period, he has to pay a premium to the government that is equivalent to the difference between the full market value of the lot at the date of application for removal of the restriction on alienation and premium previously paid, if any.

Since the implementation of the SHP up to the end of October 2010, a total of 10,572 applications for premium assessment had been approved involving total premiums of some HK$8,188 million. During January of 2012, there were 175 applications for premium assessment in process, which were handled by the Lands Department.25 Details of the number of applications for premium assessment and the amount collected over the last decade are shown in the Appendix.

13 3.4 Eligible indigenous villager population

There is no updated estimate of the eligible indigenous villager population since the last estimate of about 240,000 provided by the HYK in 2003.26 In 2005, a newspaper reported a government estimate that the number of indigenous villagers including those migrated overseas might reach 800,000.27 However, the ex-Secretary for Development indicated that the administration did not have this fi gure28 while in May 2011 the Lands Department claimed that they had not compiled statistics on or estimated the existing number of indigenous villagers in recognised villages, who are 18 years or above and are eligible but have not applied for a small house grant because it would change with the birth, passing away, migration and personal wishes.29&30

The Secretary for Development recently restated that the government does not have information on the future demand for building small houses due to the aforementioned reasons and is thus unable to provide an overall projection.

There have been some attempts by Planning Department to forecast a 10- year demand for small house development when zoning or rezoning village areas. However these forecasts rely only on the village head’s estimates which are frequently exaggerated with no attempt at independent verifi cation. For example, in the case of rezoning of a closed border area which includes the ecologically sensitive Lin Ma Hang Stream, the village heads said up to 900 men would become eligible to build small houses over the next 10 years while an additional 100 old village houses must be rebuilt. This contrasted with the low number of residents of this village (80) when offi cials made a count in 2006,31 suggesting likely exaggeration. To deal with this dramatic increase in the number of eligible men for small house grant applications, the TPB endorsed a controversial zoning change for the village without verifying the new projection. It has been suggested by professionals and green groups that the forecasted demand of land for small house development was exaggerated with an intention to gain more expansion of the V zone.

As the government has not kept any genealogical records of descendants from the 642 recognised villages, and there is no system for registering or checking the status of an indigenous villager, the system relies on the word of the village head to verify whether or not an individual is an indigenous villager or not.

14 4 Problems Associated with Small House Policy Implementation

4.1 Absence of interpretation of traditional rights

Discrepancy on Article 40 of the Basic Law states: “The lawful traditional rights and interests whether the SHP of the indigenous inhabitants of the “New Territories” shall be protected by constitutes a the Hong Kong Special Administrative Region”. traditional right Indigenous villagers claim that building a small house is part of their traditional rights under Article 40 of the Basic Law, which provides that the lawful traditional rights and interests of the indigenous inhabitants of the New Territories shall be protected.

In the absence of further interpretation provided in Article 40, what would constitute “the lawful traditional rights and interests of the indigenous inhabitants of the New Territories” is uncertain. This gives rise to the question of whether the indigenous villagers’ right under the SHP (“ding” right) could be understood as a kind of “lawful traditional rights and interests”. The HYK argues that the question can be traced back to pre-1898 customs that constitute the rights under customary law. However, there is still no legal certainty on whether the SHP constitutes a traditional right. This can only be done through an interpretation by the courts.

In 2004 and 2005 the HYK leader, Lau Wong Fat, strongly urged the government to clearly defi ne “the lawful traditional rights and interests” and map out the future of the SHP. Some leaders claimed that the HYK would consider to appeal to the court for a legal interpretation of Article 40, yet no timetable has been set by the HYK so far.32

4.2 Discriminatory nature of the policy

33 Policy The SHP is regarded as discriminatory to both female indigenous villagers, discrimination and to non-indigenous Hong Kong people (some of whom can trace their against women ancestry in Hong Kong back to before 1898)34 who are not entitled to apply and non- for a small house grant. The discriminatory nature of the policy against indigenous Hong women has been criticised by two bodies of the United Nations and the SHP Kong people is also exempted from the provisions of the Sex Discrimination Ordinance enacted in 1996, on the grounds that the administration was conducting a comprehensive review of the SHP.35 The Equal Opportunities Commission has recommended repealing the exemption of the SHP from the Ordinance on the grounds of discrimination.36

15 4.3 Eligibility for small house grant

Indigenous status According to the policy requirement, only genuine male indigenous villagers of applicants are eligible for a small house grant. The existing procedure requires that a is exclusively small house grant applicant has to submit a declaration, signed either by the verifi ed by village Village Representative of his village or by the Chairman/Vice-Chairman of heads, creating the relevant Rural Committee, to certify that he is an indigenous villager of loopholes for the village. If a claimant is unable to prove his eligible status, through birth abuse of the certifi cates or close clan ties, he has to ask the Elected Representative of his privilege village to vet and verify that his ancestors were residents of that village in or before 1898. In other words, Village Representatives hold the power to determine whether a claimant is qualifi ed to submit his application for a small house. Outsiders fi nd it diffi cult to verify his decision about land rights claims, creating a serious loophole for dishonesty and irregularities. A phone enquiry was made in December 2012 to Lands for data on the number of claims made by indigenous villagers who do not have birth certifi cates, and the initial reply was that the department has no relevant data on this.

In 2002, the Audit Commission found that building licences were issued to villagers of a village which was not on the Approved List; and there was lack of proper control over the keeping of the Small House Register.37 The Audit Commission’s report noted that the Lands Department did not keep a list of eligible indigenous villagers who are entitled to the small house grant, and the applicant does not have to submit any other evidence to substantiate the IV status for himself, his father or his grandfather. In this process, only village heads, instead of the government, have the authority to verify the indigenous status of applicants. This is an exclusive privilege generated under the policy, which has created abuses such as people obtaining certifi ed status through false declarations or forgery, and asking their overseas descendants to apply for their right. Also, the practice might cause illegal transfer of interest between different parties.

Examples of criminal cases relating to verifying indigenous villager status include: • Conspiring with a village representative to make a false declaration of genuine indigenous villager status;38&39 • A village representative allying with false indigenous villagers to make an agreement with developers regarding the transfer of a small house grant;40&41 and • Corrupting village voters in the process of a village representative election to ensure winning in the election for the benefi ts associated with the power of verifying indigenous villager status and other advantages derived from the SHP.42&43

4.4 Policy administration

Complaint of The long processing time for small house applications has been a source of long application constant confl ict between the administration and the HYK over the years, time with the HYK claiming that waiting times of over ten years left indigenous villagers frustrated. They blamed the Lands Department for the delay in processing the applications and urged the administration to review and expedite the process.

16 Notwithstanding the introduction of new procedures by the Lands Department in 2006 and 2007 to streamline the processing of small house application as well as a performance pledge to process 2,300 applications per year, substantial waiting times were still required for complicated cases that met with local objections and/or were associated with requirements imposed by regulatory authorities and site constraints. At the end of 2011, the backlog of small house applications was 10,255, of which 6,896 cases were being processed while 3,360 were pending processing (see Appendix, Table 1).

This long processing time and backlog also exacerbates the potential for corruption. There were many criminal cases in connection with the advantages offered for shortening the queue for small houses.

4.5 Property speculation

4.5.1. Selling small houses by paying a premium to the government Villagers have Speculative development of small houses has long been regarded as one of profi ted from the many abuses of the SHP. The Audit Commission reviews of the SHP small the small house house grant conducted in 1987 and 2002 noted the problem of indigenous grant by selling villagers selling their small houses soon after the issue of the Certifi cates their house or of Compliance (CCs).44 Although claimants had made declarations to the “ding” right to Lands Department that they had never made and had no intention to make outsiders any private arrangements for their rights under the SHP to be sold to other individuals or developers, this was a misrepresentation of the truth. They could apply for the removal of restriction on alienation after the issue of CCs according to provisions which allowed fl exibility on alienation for some types of grants. If applications were approved, they could sell the small houses to non-indigenous people or developers by paying the land premium to the government at a concessionary rate (see Figure 1).

The Audit Commission reported that 43% of newly built village houses had been sold between 1997 and 2002,45 while the Managing Director of Surpass Property Strategy Consultancy said, in 2002, that more than 80% of the small houses were constructed for sale rather than for occupancy by the indigenous villager.46 However the Lands Department did not take any action against the practice of small house selling because they could not reject applications which were submitted in accordance with the terms of restrictions on alienation.47 This results in the rampant practice of cashing in on the eligibility for the small house concessionary grant by many indigenous villagers without violation of the SHP, refl ecting the ineffectiveness of the restrictions on alienation for small house grants.

4.5.2. Unlawful trading of small house right A rising property market in the New Territories has led to tremendous unlawful trading of small house concessionary rights in recent years. The existence of a black market in the “ding” right has been an open secret among government and interested parties. The unlawful “ding” right trading is usually operated by experienced local agents who can facilitate a successful deal through various tactics.48 Advertisements selling “ding” rights can be seen in local property agents near village areas and even on the internet. The price of a “ding” right varies by district. According to one newspaper in late 2011, the price ranged between HK$300,000 and HK$400,000 in the villages of Yuen Long, Tai Po and Tuen Mun while the price reached as high as HK$1 million in Sai Kung’s villages.49

17 Figure 2: Managed estate project in the New Territories. Photo taken in Tai Po in Feb 2013 by Figure 3: Managed estate project in the New Territories. Photo taken in Yuen Long in Camille Lam Feb 2013 by Samson Lee

4.5.3. Examples of profi ting from small house deals A high-end estate development made up of 33 village houses in Ping Yeung, Ta Kwu Ling, named The Parkland demonstrated that indigenous villagers exploited their “ding” right to build small houses for quick profi ts. Land records showed that developers bought six lots from the villagers surnamed Chan from 1997 to 1999, then the lots were divided into small sites and sold to other indigenous villagers within several years. In 2007, most of villagers applied for and were granted building licences under the SHP by the Lands Department while at least six owners had sought permission to sell their village houses within a year of the completion. According to records of land transactions, these village houses were never intended to be occupied by villagers.50 The practice is common in many managed estate projects in the New Territories (see Figures 2 and 3), however, it is diffi cult to further investigate the agreements made between developers and villagers in connection with these small house deals.

4.6 Planning

4.6.1. Absence of a comprehensive development plan for the rural New Territories Proliferation of When the SHP was fi rst introduced it was seen an interim measure that small houses would complement the production of a comprehensive development plan across rural for the rural New Territories.51 However, forty years later there is still no land with little comprehensive development plan for the rural New Territories (see Figure planning control 4), and the SHP, rather than improving planning, has caused a proliferation of three-storey structures across rural village areas with little planning control over location, layout, facilities, transport or open space (see Figure 5). Although land use in the New Territories is regulated by statutory local plans – Outline Zoning Plans (OZPs) or Development Permission Areas (DPAs) – much rural land is outside the zoning boundaries without any statutory planning protection.

4.6.2. Lack of statutory plans for many villages Unfavourable Under the SHP, planning permission from the TPB is not required for new impacts small houses constructed within the V or VE zones. However where a local on village plan (OZP or DPA) exists for a village area the associated infrastructure and environments amenities will at least be properly planned for. because of no statutory plans

18 Figure 4: No planning in rural New Territories. Photo taken in Yuen Long in Feb Figure 5: Proliferation of 3-storey structures across rural area. Photo taken in Yuen 2013 by Samson Lee Long in Feb 2013 by Samson Lee

However, for most rural villages in the New Territories there are no statutory plans and infrastructure such as car parks, access roads, toilets, sewerage and drainage, and refuse collection points might not be provided. Clusters of small houses without proper sewerage or drainage systems, fl ood protection, adequate roads and parking, and open space are a typical situation in the New Territories, causing problems such as frequent overfl ow of septic tanks (causing water pollution and poor hygiene) and fl ooding (see Figure 6). In addition, roads, utilities, and infrastructure are typically constructed around a proliferation of scattered houses without proper planning, monitoring and management by the government (see Figures 7 and 8). This is inappropriate for rural areas and has resulted in unsightly suburban sprawl across the New Territories and brought numerous unfavourable impacts to village environments. Some typical examples include: • Open space for leisure and space for access has been built on for small houses, leading to serious shortages of open space in and near villages in Tai Po Lai Chi Shan;52 • Access to a village in Sai Kung, including fi re and ambulance services, was blocked by a landowner who constructed his small house directly over the only access road, which was on his private land;53 • Two villages in Yuen Long were fl ooded after heavy rain because their inadequate drainage systems caused clogging of soil;54

Figure 6: Small house with poor Figure 7: Cluster of small houses without proper planning and management. Photo Figure 8: Small house constructed next to the drainage system. Photo taken in Fan taken in Fan Ling in May 2012 by Alice Lai facade of other houses. Photo taken in Fan Ling Ling in May 2012 by Alice Lai in May 2012 by Alice Lai 19 • Foul smells from an outdoor refuse collection point located on a private vacant land in Tuen Mun led to poor hygiene conditions in the village area containing a cluster of small houses;55 and • River pollution in many Yuen Long villages was caused by improper sewerage for small houses but planning and action by the government has been slow.56

4.6.3. Relaxation of planning controls Elimination The Interim Criteria for streamlining small house applications, adopted by of planning the TPB in 2007,57 eliminated constraints on small house development on land constraints on adjacent to V zones. It allowed small houses to be built within or adjacent small house to conservation related zones, country parks, and green belt land without development on the need for planning permission from the TPB if the development did not land adjacent to involve tree felling.58 V zones The measure was criticised because it would lead to uncontrollable sprawl of village houses in virgin land adjacent to villages, exacerbate the problems caused by improper planning and management mentioned above, and cause environmental degradation to surrounding open space and green belt land.59

4.6.4. No proper planning for rural abandoned lands Unauthorised Lack of proper planning for the abandoned farmland and fi sh-ponds in changes of use of rural areas has encouraged unauthorised changes of land use, such as illegal rural abandoned dumping and excavation, and unlawful occupation of government land (see lands Figures 9 and 10). These then become degraded eyesores like container and junk metal yards. Such abuse is effectively condoned by subsequent approval by the TPB for small house development. This adds to the problems caused by planning dysfunction in the New Territories.

4.6.5. Relaxation of fi re safety requirements Practical The new fi re safety arrangements adopted in 2006 that relax the EVA problems caused requirement associated with small house applications gave rise to local by the new villagers’ concerns about fi re access and safety of their villages. After regulations relaxation of the regulations there were several reports of villagers who had found that rampant construction of small houses had blocked their original fi re access or had used up space reserved or available for an EVA. Further, the required fi re safety alternatives might not be properly implemented by villagers and monitored by the government.60 A request was sent to the Fire

Figure 9: Abandoned farmland in the New Territories. Photo taken in Tai Po in Feb 2013 by Figure 10: A ban on unlawful occupation of government land. Photo taken in Yuen Camille Lam Long in Feb 2013 by Samson Lee

20 Figure 11: Illegal enclosed rooftop. Photo taken in Yuen Long in Feb 2013 by Samson Lee Figure 12: Illegal ground-level extension. Photo Taken in Fan Ling in May 2012 by Alice Lai

Services Department (FSD) for checking if they inspect each small house after construction and whether there were any regular subsequent inspections. The reply was that FSD would conduct inspection only on a need basis, such as fi re hazard complaints inspection, fi re service installations / EVA inspection and familiarisation visit etc.

4.7 Unauthorised building works

4.7.1. Investigations of UBWs in 1996 and 2004 Aggravation The issue of UBWs in the New Territories village houses has been investigated of UBWs in the and reported on three times by the Ombudsman in the past 15 years but New Territories has not been resolved, becoming a matter of public interest in recent years. due to mal- The issue was fi rst exposed by the Ombudsman in 1996 who reported administration that a substantial number of small houses, i.e. nearly 6,000 out of 18,000 constructed under the SHP, had illegal structures including enclosed rooftops and ground-level and rooftop extensions (see Figures 11 and 12).61 In 2004, the Ombudsman indicated that the situation of UBWs in the New Territories was aggravated by the maladministration of government departments, i.e. Lands Department and Building Department, who were ineffective and ineffi cient in enforcing the law against illegal construction in small houses, adopting a tolerant approach to complaint cases.62

4.7.2. Aggravation of UBWs highlighted in recent Ombudsman’s report Enforcement The latest Ombudsman’s investigation report, released in 2011, concludes policy of UBWs that the proliferation of UBWs among small houses was a result of the created room enforcement policy amended in 2002 which prioritised the enforcement of for the existence work-in-progress infringements on village houses. The Ombudsman criticised of small houses’ the approach adopted by the government as selective, narrow, unfair illegal structures and inconsistent, and which appeared to be more lenient towards illegal structures of small houses compared to other urban buildings, giving an impression that small house owners were privileged. It was criticised that the work-in-progress policy “clearly defi es common sense and logic”, which left room for small house owners using “stalling tactics”, i.e. refusing government inspections during construction, to avoid removing their uncompleted illegal structures.63

21 4.7.3. Government enforcement against UBWs Two-pronged To deal with the rising public concern over this matter and the violent approach response of villagers against enforcement actions, in 2012 the government adopted in adopted a two-pronged approach: to take immediate enforcement against 2012: immediate UBWs with higher potential risk of public and building safety on the one enforcement hand, while implementing a UBW reporting scheme64 for those of a less against UBWs serious nature or with lower potential risk on the other hand.65 However, and UBW the government has still not conducted a detailed survey of the UBWs reporting scheme attached to small houses in the New Territories but merely estimated the total to be in the tens of thousands, with the problem being more serious in Yuen Long. The common forms of UBW include enclosed rooftops, balconies and canopies, external window grilles, anti-burglary grilles and metal gates, retractable canvases, ground level and rooftop extensions, as well as structures which are in blatant contravention of the height and area restrictions or even entire additional storeys.66

4.8 Land resources

4.8.1. Unlimited demand vs. limited supply of land Fundamental The “infi nite” demand from indigenous residents to build village houses, unsustainability as recognised by the Secretary for Development recently, leads to a serious of the policy land supply issue for the government who are continuously seeking suitable housing land to meet the needs of small house grant applications.67 The problem is caused by the fundamental unsustainability of the policy that is associated with unlimited demand but limited supply of land for housing. Although the Lands Department previously estimated the land available for development to be 1,620 hectares, the demand for small houses is unknown due to an unverifi ed number of eligible indigenous males and their uncertain intention to stake their claim. However assuming a housing density of 40 houses per hectare,68 the maximum number of small houses that can be built within V and VE areas is around 65,000, whereas the number of eligible indigenous villagers who can apply was estimated in 2003 as 240,000,69 and each year the number of new potential applicants grows as more male villagers reach the age of 18.

4.8.2. Expansion of village area and green belt land for small house development More land A review of government actions in increasing land reserved for small house reserved for development in the past decade indicates that more land has been zoned small houses “village type development” to cater for the demand for small houses. A through planning number of OZPs and DPA Plans have been approved or amended by the process TPB with the intention of designating land for village development and expansion to meet the demand for small houses.70 Again, the new measure adopted in 2007 (see Section 2.1) was intended to address the shortage of land while meeting the demand from indigenous male villagers for small houses. However, what it means in practice is that small houses have been allowed to expand to and encroach on open areas and green belt areas without planning permission.

22 4.8.3. Additional land approved for development Land outside For those small house developments on agricultural land outside V zones, V zone can be green belts, or other government land, applicants are required to obtain approved for planning approval from the TPB. A proposed development outside the small houses V zone could be approved if the application fulfi lled certain criteria in through planning accordance with guidelines under planning control. According to Planning application Department, a total of 1,178 applications were approved over the past decade, involving around 15 hectares of land.71

4.8.4. Acquire “extra” land for development by illegal destruction activities “Destroy fi rst, Illegal dumpling is rife in the New Territories because it is viewed as a build later” “possible” way to acquire “extra” land to build village houses. Illegally fi lling activities change abandoned farmland or fi sh-ponds with construction waste, then leveling rural land for them off for small house development, has become a common tactic, turning small house rural land into an eyesore. A review of precedents found that illegal dumping development usually occurred prior to applying for planning permission because the TPB would allow development in villages with a strong demand for small houses if the technical assessment criteria for small houses were met. The history of illegal dumping on the applicant’s site, however, was not considered to be relevant in the assessment. This obvious loophole in planning procedures effectively rewards people for degrading land, giving rise to the practice of “destroy fi rst, build later” across the New Territories.72 This illustrates a failure of the current planning system in monitoring rural land use and preventing land abuse, in which planning rule enforcement is isolated from the planning application process and dealt with by different government departments. Planning Department has no authority to take enforcement action outside DPAs and other planned areas, and within the DPA it is often diffi cult to provide evidence if there is no pictorial record showing the original status of the land or of the dumping activities.

Some examples of “destroy fi rst, build later” activities associated with small house development include: • Tai Po She Shan Tusen (社山村);73 • Sheung Shui He Shang Heung (河上鄉);74 • Tai Po Luk Keng (鹿頸);75 and • Sai Kung Shan Liu Village (山寮村).76

4.8.5. Acquire “extra” land by unlawful occupation of government land Ineffective Another signifi cant land issue associated with small house development is the detection and unlawful occupation of government land in the New Territories, particularly enforcement in light of the scarcity of land in Hong Kong. A number of cases were of unlawful reported in the media, including unlawful occupation of government land government for construction of unauthorised backyard gardens and railings in front of a land occupation small house,77 bridges over watercourses for access,78 platforms near a small by Lands house, car parks, and facilities for commercial purposes in a country park.79 Department According to the audit report released in March 2012, most of the unlawful government land occupation cases were detected as a result of media reports and complaints from members of the public while some government land sites have been unlawfully occupied for a long period of time without detection due to a lack of regular inspections by the Lands Department. For those identifi ed cases of land control, ineffective and ineffi cient enforcement action was taken by the Lands Department, resulting in some cases remaining unresolved for a long time after detection.80

23 4.9 Environment

4.9.1. Environmental destruction associated with SHP Adverse impacts The public has long been concerned about the environmental impacts of of small house the SHP on rural land and conservation in the New Territories. There is development evidence that haphazard development of small houses has caused signifi cant on the natural adverse effects on the natural environment while large-scale exploitation environment of land for building village houses has been irreversibly damaging to some and ecological ecologically valuable habitats. As a consequence, some landscape features habitats have been eroded while the quality of the rural environment is deteriorating throughout the New Territories (see Figure 13). Small house development has caused a wide variety of direct or indirect, temporary or permanent impacts on natural habitats, which include: • Illegal excavation and dumping on abandoned farmland,81 fi sh-ponds and wetlands; • Destroying feng shui woodlands by felling trees;82 • Clearing vegetation and trees on private83 or government land;84 • Blocking natural streams by concrete structures85 such as dam-like access roads;86 and • Contamination of streams, rivers and coastal areas by sewage discharge from overfl owing or poorly sited septic tanks.

4.9.2. Rezone a conservation site to green belt Inproper zoning The impacts of small houses on natural habitats can be illustrated by a joint process damages statement submitted by green groups to government in December 2011.87 ecologically The planning authorities were criticised for downgrading the classifi cation valuable habitats of a sensitive border area, the two-kilometre-long Lin Ma Hang Stream, to appease powerful villagers. The stream, which is of high ecological value, was designated a site of special scientifi c interest (SSSI) in 2007. Since reopening of the closed border area, the TPB originally planned to create a 20-metre-wide buffer area on both sides of the stream and to zone it as a conservation area. However, the proposed zoning was changed from conservation to green belt, after government met with angry and powerful villagers, to facilitate increased small house applications from villagers. The decision was criticised as a bad precedent that would hamper future conservation of ecologically sensitive areas. This was regarded as inappropriate zoning, effectively a political decision without any scientifi c basis.88

4.10 Governance issues

4.10.1. Infl uence of HYK in the government Political power of The HYK, which looks after the interests of indigenous villagers, has HYK enormous political clout in both the Legislative Council (LegCo) and the ExCo. Since the 1980s, rural voters formed a cohesive conservative block to determine the success and failure for a policy or candidate. The continued prominence of rural issues in the past few decades has also been attributed to the political infl uence of the HYK, which holds one of the “functional constituencies” which make up half the seats in LegCo.89

Lau Wong-fat, the HYK’s chairman and a billionaire land owner, is a member of LegCo, the Chinese People’s Consultative Committee, and up until 2012 a member of ExCo. In 2012 the Deputy Chair of the HYK and LegCo member

24 Figure 13: Tree felling in rural area. Photo taken in Yuen Long in Feb 2013 by Samson Lee

Cheung Hok-ming replaced Lau Wong-fat as ExCo member. Lau played a critical role in drafting the Basic Law by ensuring that the traditional rights of indigenous inhabitants were protected under Article 40. Lau and other rural leaders have been members of the Chief Executive Election Committee. The HYK held over 20 seats in the Election Committee, but effectively controlled more than 80 votes, including the seats allocated to the agriculture, fi sheries and other related sectors.90

4.10.2. Transparency in the policy-making process No consulation The relationship between the government and the HYK is very much in the decision- associated with small house issues. The HYK, being the representative body making process of indigenous inhabitants, has actively engaged in lobbying government in dealing with offi cials to protect their land rights. It is well known that most members of SHP issues the HYK possess considerable holdings of rural land in the New Territories while some of them are property developers. The power structure and interest within the HYK is unknown. After Donald Tsang assumed power as the Chief Executive of the government in 2005, a number of actions were taken to handle the grievances of indigenous villagers, including setting up an interdepartmental Steering Committee to look into various issues relating to the SHP, simplifying the vetting procedures for the applications to speed up the approval time, and relaxing the fi re safety requirements. The government’s initiatives were welcomed by the HYK, while Tsang was seen as giving political favour to the rural forces in return for their support to his governance and their votes in the following Chief Executive election in 2007. The actions of Tsang in dealing with the SHP were essentially a political strategy with a lack of consultation in the decision-making process. This demonstrates the HYK’s infl uence and government’s failure of competence in addressing rural issues in a fair and comprehensive way.

25 4.10.3. Accountability of the government No progress was The many and repeated problems with the SHP in implementation reveals made on the the government’s lack of accountability and comprehensive plan to resolve policy review the issue. The original stated intentions of the policy – to accommodate while no action indigenous village families who needed housing in a speedy manner, to was taken by the improve health standards, to put a halt to temporary structures, and to government to defi ne the areas in which small houses may be erected on a more logical address the SHP basis – are either obsolete or have been totally distorted by the many abuses. issues In response to political pressure and public criticism about the policy in recent years, the government continues to state that the policy is under review, despite no evidence of any progress. It is apparent that the ongoing ‘review’ has become an excuse for taking no action by the government, and thus a means of avoiding disputes with the HYK caused by any change of the policy that does not work in its favour. Given that no pragmatic progress, action plan or time frame was made for taking forward the review in the previous administration, the ex-Secretary for Development, Ms Carrie Lam, fi nally admitted that the review was no longer active.91

The recent public concern over UBWs and other issues related to the SHP provides the government with a good opportunity to open up the issue for wider discussion in the community. This could result in some constructive ways forward through a more transparent process. However, the reluctance of the administration to initiate debate and propose changes to the policy demonstrates their lack of political courage in dealing with this controversial issue.

4.10.4. Maladministration by departments Lack of The various investigation reports by the Audit Commission, the Independent coherence in Commission Against Corruption (ICAC) and the Ombudsman92 stated that the overall government departments failed to take necessary law enforcement action administration, when dealing with violations of clauses in small house grants.93 In addition, undefi ned the reports suggested that there was maladministration by some government responsibility departments in dealing with issues related to small house development, between including unauthorised building structures in small houses, “destroy fi rst, departments, build later” activities, and unlawful occupation of government land.94 While and isolated operational government departments claim this is down to shortage of manpower, the procedures lack of coherence in the overall administration, undefi ned responsibility between departments, and isolated operational procedures were also reasons why action was not taken against the illegal activities.

A further example of possible maladministration is the fact that the government has never kept track of land usage and the broader effects of small house building. This means the departments concerned have no basis to estimate any long-term implications and impacts caused by small house development.

26 5 Perception of Stakeholders

5.1 Government

Aware of the Although a review of the SHP was announced in 1995 to determine the impact of future of the policy, the administration has never set a deadline for the “unlimited end of the review and refuses to release any information regarding how demand and many meetings have been held or what, if anything, has been discussed. limited supply of As mentioned in previous chapters, some technical measures have been land” associated introduced in response to villagers’ increasing discontent about long with the SHP application times, but no proposal has been made to tackle the myriad problems associated with the policy. The concern over “unlimited demand and limited supply of land” associated with the SHP was recently raised by the ex-Secretary for Development, who stressed that considerable expansion of village zones would cause an adverse impact on their ability to satisfy the housing needs of general citizens and develop other industries.

No proposal to Regarding the speculative development of small houses and illegal trading review the policy of small house rights, the administration has long been aware of the issues, administration however, no plan has been proposed to review the present administrative and prevent abuse procedures or introduce restrictions to prevent abuse, other than UBW.

UBWs and To curb the proliferation of new UBWs attached to small houses and SHP were two unauthorised use of government land, the administration responded to separate issues public concern and stepped up the enforcement of relevant legislation and lease conditions. However, it was clarifi ed that the handling of UBWs was not related to the SHP because they were two separate issues.

5.2 Heung Yee Kuk

HYK says building The HYK’s strongly held position is that “Our traditional right is protected a small house by Article 40 under Basic Law”. They consider building a small house is not is a legal right only a traditional custom but a legal right for every indigenous male resident of indigenous of the New Territories. The HYK are aware of illegal trading of small house villagers rights but consider this to be acceptable on the basis that some villagers who according to would be squeezed in a small house with a big family and unable to afford Article 40 the construction cost of a small house, could “sell” their building right to developers in return for a free fl at. The black market for trading small house rights is thus regarded as a way to improve the living environment of villagers and reduce the number of people queuing for public housing.

Opposes any Generally speaking, the HYK, rural committees and village representatives change affecting are certain to oppose any change that threatens lucrative land deals in the their profi t from New Territories. The HYK repeatedly lodges complaints about the long the land grant processing time and administrative procedures of small house applications, and urges for blaming the complicated technical requirements, insuffi cient human speeding up the resources of the Lands Department, and shortage of land. To meet villagers’ administration needs, the HYK constantly pressures the government to issue new building process and permits and expand village areas for small house applications. They fi ght expanding V zones against zoning of villagers’ private lands as Conservation Areas, while

27 proposing legalisation of dumping on private land (with the justifi cation that it would absorb soil excavated for major public infrastructure projects and save the cost of exporting waste to the Mainland. However, the HYK does not agree there is indefi nite demand for land for small house building and claim that the demand is exaggerated by the government.95

Seeking a The HYK recognises the serious situation of UBW in the New Territories and compromise has sought a compromise approach to resolve the issue. “The government approach to should tolerate illegal structures that do not pose an immediate danger. resolve the issue An amnesty would be a good way to create unity and reconciliation”, the of UBWs in the Chair of the HYK was reported as saying. They also argue that houses built New Territories on private land which was confi scated and then re-granted by the colonial British administration in 1905 should be exempted because this kind of houses were part of traditional rights protected by the Basic Law.

Refuse any In principle, the HYK is not against compensation either with cash or a house extreme policy elsewhere, such as a fl at from the Home Ownership Scheme, in exchange alteration but for giving up a villagers’ concessionary right. They also suggest allowing open to discuss joint applications to build high-rises on the same plot of land as a way to the compensation make better use of rural land. HYK leaders have warned that any extreme with the alteration of the policy would lead to a serious confrontation organised by government in the villagers. exchange for giving up the right 5.3 Indigenous villagers

Complain Indigenous villagers generally believe that the small house grant is a about the long lawful right derived from their history of living in villages while the SHP application is a compensation and appeasement offered by the government for land process resumption. The long processing time for small house applications and the limited supply of land for small house building have been recognised by villagers. Some complain that waiting times over 15 years are unreasonable. They hope the application process can be shortened and simplifi ed by the government.

Unhappy with Most indigenous villagers might know the “market value” of their eligibility the change for a small house grant but this does not imply they are willing to give up of village their right for cash. Some would prefer to keep this provided that one day community they might need to apply for a small house. Some indigenous inhabitants caused by indicate that the selling and renting out of small houses led to increasing increasing numbers of outsiders moving in, causing a change of social structure and outsiders moving culture in a village community. They express their discontent with speculative in development of small houses that pushes up the land price, puts much of it in the hands of developers, encourages an unproductive attitude among male indigenous villagers, and diminishes their sense of belonging to the village.

Concern about Villagers are dissatisfi ed with village management by the government who the deteriation shifted the responsibility to village heads and allowed ad hoc small house of village development on V zones. Some complain that their living environment is environment packed with small houses while the government is reluctant to deal with caused by serious pollution and hygiene problems caused by increasing density. Some small house villagers are unhappy with the new fi re and safety arrangements imposed in development 2006 because the only access road to their house was blocked by new small houses built around them after the relaxation. In addition, many villagers blame the illegal activities of excavation, dumping, and grass or tree felling

28 with destruction of their village feng shui and natural environment. However, they fi nd no way to stop these because of the different interested parties and land politics behind the activities. Some private landowners strong oppose the zoning of their land as Conservation Area because its potential market value would drop if construction on the site is restricted.

Different views A majority of indigenous villagers oppose the enforcement action against on UBWs UBWs and ask for rationalisation of their illegal structures, but some believe that these UBWs on small houses should be demolished anyway because they are illegal.

Realizing the Although indigenous villagers hope that the SHP will be long-lasting, they expiry of the may have a thought that the policy will fade out one day when all housing policy but look for land runs out. Some claim that the policy should be valid at least until 2047 a substitute plan while others expect the government to have a new proposal to accommodate to accommodate the housing needs of indigenous villagers. their housing needs 5.4 Non-indigenous residents

Blame about the Non-villager residents generally supported discontinuing the SHP because policy abuse and they observed that the policy has been abused for profi t by villagers and urge for scrap developers, with small houses built as part of an estate as speculative real of it estate developments.96 They point out that after a villager sells off his concessionary right or small house, his sons can apply for another one, in an endless cycle that kills the land. Some argue that the “tradition” of building a new small house in a male indigenous villagers’ lifetime has not been defi ned in Article 40 while the “tradition” could be changed over time even though this tradition might be recognised as a lawful right.

No clear Residents indicate that where the newly built small houses mostly are sold or procedure for rented to outsiders, more than half of small house inhabitants are foreigners. managing the They complain that the existing government policies favour indigenous government villagers for land development or change of existing structures within the V land in the New and VE zones. Applications by foreigners for land redevelopment projects Territories in a village might receive a lot of objections from indigenous villagers. Also, except for the SHP, there is no clear procedure for managing the government land in the New Territories, and as a result, those non-villager residents are in a bad situation when dealing with other private landowners of the village and the government for getting planning permission or legalising development right on their purchased land. The media sometimes reports complaints about obstruction of the only access road to villagers’ home by newly built small houses.

Concerns about Deterioration of the village environment caused by illegal dumping deterioration and excavation also concerns these residents. A number of cases have of village been reported by residents and stopped by the Lands Department after environment investigation. caused by illegal dumpling and excavation

29 5.5 Politicians

Politicians‘ views Perceptions of politicians97 towards the SHP can be classifi ed as follows: on the SHP • The administration should cancel the SHP due to its outdated objectives; • The administration should publish a time table for reviewing the policy and seek ways forward to tackle the unsustainable building of small houses in rural areas; • Some government departments have failed in the enforcement of land use and building regulations as well as monitoring of illegal transfer of interest associated with the SHP; and • The administration should set a date to terminate the SHP by offering cash compensation to indigenous villagers while those indigenous villagers with housing needs can be accommodated by the Home Ownership Scheme.

Candidates’ During the 2012 Chief Executive Election, the candidates expressed strong views on the views on the SHP. Tang Ying-yen acknowledged building small houses as SHP during the a lawful traditional right of indigenous villagers and proposed relaxing Chief Executive the height rule on village houses to allow building multilevel small houses. Election 2012 Leung Chun-ying did not have a concrete proposal for settling the SHP but he pledged to review the SHP by considering its history and reality as well as review land use planning in the New Territories. In addition, both candidates from the democratic camp suggested resolving problems arising from the SHP by setting an expiry date for the policy.

5.6 Green groups

SHP might Green groups play a role in monitoring and reporting the environmental be a driver destruction activities associated with small house construction in rural areas, for different and are concerned about the infl uence of these activities on natural habitats destructive in and around development sites. Although no offi cial statistics show the activities on ecologically sensitive sites

Figure 14: The Wall of Destruction 2006-2010 Source: WWFHK

30 Figure 15: Natural habitats of Shalotung is threatened by different unlawful destructive activities. Photo taken in Tai Po in Oct 2012 by Simon So

degree of destruction caused by the development, green groups generally believe the SHP might be a driver for different destructive activities on ecologically sensitive sites. They are deeply concerned about the “destroy fi rst, build later” syndrome that can lead to continuous degradation of rural landscapes (see Figure 14). A joint letter was sent by green groups to urge the government to tighten the current regulations on small house applications because the lack of objections to this application by government departments would promote the misconception of “destroy fi rst, build later” that sets a bad precedent which leads to increasing illegal dumping, tree felling, site formation and other trashing of sites of ecological, agricultural and landscape value.98

Concern about Some green groups claim that the demand for land for small house expansion of building is exaggerated by village heads, leading to overexpansion of V V zones and zones and increasing development pressure on some Conservation Areas development with environmentally sensitive habitats (see Figure 15). They perceive the pressure on zoning process and determinations on planning applications as favouring conservation small house development by indigenous villagers over conservation. They areas were disappointed that a natural stream located in the Closed Area with high ecological value was proposed to be rezoned from a Conservation Area to green belt, which would allow small house applications and make construction work possible in this area, leading to permanent adverse effects to the ecosystem of the stream.

31 5.7 Professionals and academics

Concern about Professionals and academics generally recognise that the SHP has been insuffi cient abused for profi t, rather than serving the accommodation needs of land serving indigenous villagers. They are concerned about the insuffi cient land the unlimited resources serving the unlimited demand for small house development. Some demand for small have called for a comprehensive review although they understand there houses are historical and political reasons for implementing the SHP, and there would be heavy pressure from the HYK and other interested parties against implementing any solutions which might change or minimise the existing privileges of the indigenous villagers.

Different views Scholars from the Faculty of Law of the University of Hong Kong have on the expiry expressed various views on the SHP and Article 40. Johannes Chan argues date of the policy that since SHP has been abused seriously, there should be restrictions exerted on controlling the small house transaction.99 Eric Cheung argues that it is not necessary to keep the SHP until 2047 as the policy itself is not included in the Sino-British Joint Declaration.100 Benny Tai also indicates that it is inappropriate to interpret Article 40 in connection with Article 5 of the Basic Law (that “the previous capitalist system and way of life shall remain unchanged for 50 years”). This means 2047 should not be understood as the earliest expiry date for the policy.101

Concern about Regarding the streamlining measure of allowing development on green the impact of belt with exemption of planning permission, planners worry that it will take Interim Criteria away the monitoring and discretionary powers of the TPB while violating the adopted for principle of nature conservation and amplifying the distortions of the SHP. small house They argue that some villagers have been profi ting by selling their rights to applications build small houses, and speeding up the approval procedure will make the situation worse.

Forcast the In response to the latest released land supply fi gures, which show 932.9 capacity of hectares of government land in village zones reserved for small house available land development, Lawrence Poon Wing-cheung, of the Institute of Surveyors, for small house estimates that the land could accommodate 50,210102 small houses while based on latest Edward Yiu Chun-yim, a former real estate professor at the University of land fi gures Hong Kong, put this at 133,900 houses.103 Based on the annual average of 1,315 small house applications received per year over the last decade, the former estimate means the land could meet the demand for 38 years while the latter pushes it to 103 years.104 A more realistic estimate based on a density of 40 houses per hectare would amount to a supply lasting 28 years. Even the highest estimate of density will not satisfy the ever-growing and open-ended demand. It is also likely that as 2047 – or whatever expiry date the administration indicates – approaches, that the number of applications will soar dramatically.

Ideas for the To resolve these issues, some ideas have been raised, such as building high- change of the rise buildings to allow more indigenous villagers to live on the same plot policy but their of land, developing “Comprehensive Village Areas”, giving fl ats to villagers feasibility is instead of land for building houses and ceasing the small house applications doubtful with compensation to eligible villagers, etc. Yet, these ideas do not address the issues associated with the unsustainable nature of the policy and their feasibility is doubtful.

32 5.8 General public

Different public Although a majority of the public believe that the SHP’s original purpose concerns about of accommodating the housing needs of indigenous villagers is out-dated, the SHP concern is only moderate (except for UBW in the New Territories) because, among other reasons, only indigenous villagers have a direct interest. Also, the general public usually have an insuffi cient understanding of the history and complexity of the policy that might lead to their indifferent attitude.

The main concerns associated with the SHP expressed in the media by members of the general public consist of the increasing land pressure for housing, unequal housing rights between urban residents and indigenous villagers, abuse of the policy and the eligibility for small house grants that generate big profi ts to indigenous villagers and developers, inconsistent responses and actions when dealing with UBWs between urban and rural areas, rural land use planning and land shortage for development, environmental destruction and degradation, future development of the New Territories, and failure of government departments in enforcement against different forms of illegal activities in connection with the SHP in the New Territories.

Discontent A concern group representing home-owners in private buildings charged with different that the villagers have been an ultra-privileged class in Hong Kong and attitude of the by protesting against the removal of illegal structures attached to their government in small houses by the government, they were asking for super privileges on dealing with top of the concessionary right. They claimed that many small houses were UBWs in private not the homes of indigenous villagers but had been sold as luxury houses buildings and for non-indigenous residents. The group felt that the “soft attitude” small houses of the government in the past had given “unreasonable expectations” to indigenous villagers and given rise to “unreasonable demands” for small houses. They were dissatisfi ed with the double standards towards enforcement action on illegal structures displayed by the government.105 In addition, some commentators clarifi ed that UBWs on small houses are defi nitely unlawful and do not align with the traditional rights under Article 40.106 All houses, whether they are in towns or rural areas, should be covered by the same legislation.107

Support for To ease different confl icts arising from the SHP, the majority tend to support setting an setting an expiry date for the policy or simply abolishing the policy because expiry date for of its out-dated objectives and unsustainable nature. It is clear that the the policy or continuation of the policy is of benefi t to a small group of people and abolishing the unfair for the majority of society. While various ideas have been suggested policy to address particular problems caused by the policy, they usually lack the support of statistical references or case studies. With the growing desire of Hong Kong people for a better quality of life and well-being in recent years, there will certainly be more attention paid to small house development in the countryside that is seen as their back garden for leisure and recreation.

33 6 Discussion and Recommendations

6.1 Constitutional issues

6.1.1. Interpretation of Article 40 of the Basic Law Small house There is no legal basis for the HYK’s claim that building a small house is a grant is not traditional right protected under Article 40 of the Basic Law. While the small a statutory house grant application refers to “right” the administration has publicly entitlement but stated that the indigenous villager’s right to a small house is not a statutory an administrative entitlement but an administrative measure because no legislation was ever measure passed on this. In 1997, the pre-reunifi cation administration reiterated that the SHP did not confer legal rights on indigenous villagers.108

Court case The meaning and interpretation of traditional rights to which Article 40 defi ning that refers will be critical in determining whether this includes the “right” to residence a small house grant or building a small house. In a court case brought by requirement of an indigenous villager resident in Australia challenging a refusal of his the policy must application for a small house grant on the grounds that he was neither be part of the resident nor intending to be resident in the village, the villager argued that traditional right the small house was to accommodate his mother but admitted he would remain in Australia to receive statutory medical benefi ts.109 The plaintiff claimed that the residence requirement was unconstitutional. The judge ruled that the traditional right was a right to build on land that the villager owned, while the policy was an administrative measure that provided land on certain conditions to those who had no land so that they could exercise that right. The judge thus remained the same decision that the requirements of the policy must be part of the right. The decision was well reasoned in this case, however, the court was hampered by lack of evidence as to precisely what rights had traditionally been exercised by indigenous villagers.110

Defi ning A clear legal interpretation of Article 40 given by the appellate court would traditional right provide an authoritative interpretation of what the traditional rights are. The by seeking legal government should be more proactive in seeking an interpretation from the interpretation Court when the opportunity arises.111

However, even if the courts rule that building a small house is considered a right under Article 40 it should be noted that Article 40 does not protect certain rights if these are in confl ict with other legislation.112

6.1.2. Discriminatory nature of the SHP The issue of discrimination against women could be addressed by No ground for repealing the exemption for the SHP in the Sex Discrimination Ordinance extending small and extending the eligibility for small houses to female villagers, but this house grant to would only exacerbate the fundamental unsustainability of the policy, and women or other exacerbate the discrimination against non-indigenous Hong Kong people. If groups the SHP is wrong in principle on other grounds, then extending it to women or other groups of people is not a solution.

34 6.2 Corruption and property speculation

6.2.1. Absence of a system to check indigenous villager status Abuse and The current system for vetting claimants for small house building permits corruption caused to verify whether they are truly eligible is open to signifi cant abuse and by the existing corruption. system Recommendations In 2003 the ICAC recommended a number of measures to minimise made by ICAC corruption, including more detailed verifi cation of applicants’ indigenous and Audit villager status.113 In 2002 the Audit Commission recommended more specifi c Commission procedures, particularly in complex and doubtful cases,114 to ensure that the small house concession grant is only given to genuine indigenous villagers.115 The Commission has also recommended that the penalty for making a false declaration be clearly specifi ed in the declaration form and relevant legal documents for the small house grant applications so as to deter false claims.

Unchanged In response to the Commission’s recommendations, the practice of checking priviledge of doubtful cases was revised in 2006 to require the Lands Department to carry village heads out a detailed investigation, upon presentation of additional information in verifying and evidence, to establish the applicant’s eligibility for a small house grant, villagers’ status including checking the family tree/clan book, ownership of private lots in and no penalty the New Territories dating back to the Block Government Lease, inscriptions for making a appearing in Chi Tong and on ancestral graves, etc.116&117 However, the false declaration infl uential role of village heads is unchanged while the penalty for making a false declaration has still not been specifi ed. The loophole for dishonesty and irregularities is still there.

6.2.2. Selling of small houses soon after Certifi cate of Compliance Recommen- To tackle the problem of indigenous villagers disposing of their small dations on houses soon after the issue of the CCs, the Audit Commission proposed to removal of the include a moratorium clause on the removal of the restriction on alienation restruction to the conditions of small house grants made through building licenses, on alienation land exchanges and PTGs; provide additional procedures for carrying out proposed by the further investigation when information arises on possible breaches of license Audit to control conditions, misrepresentation by indigenous villagers or abuse of the SHP; the policy abuse and take other measures, such as enforcement action, to effectively control potential abuse of the SHP.118

No change to Research for this report demonstrated that the small house grant was the existing regarded as a valuable privilege especially in a rising property market. administration to However, no action has been taken by the administration to control the control the abuse practice of cashing in by indigenous villagers on their eligibility. Since any moratorium on assignment of small houses made by any type of grant has been blocked by the HYK, the clause of removal of restrictions on alienation for small house grants remains unchanged and the disposal of small houses soon after the issue of CCs continues unchecked.

6.2.3. Unlawful trading of small house ‘ding’ right Blocking the A review of the terms of restrictions on alienation for different types of small loopholes house grants is needed. Lands Department should investigate the issue to through review understand their operation and recommend ways to block the loopholes. and investigation

35 6.3 Planning

6.3.1. Lack of vision and statutory plans for rural areas No comprehensive The lack of a comprehensive development plan for the New Territories has plan means meant that planning is fragmented and ad hoc, leading to public concern fragemented and unnecessary controversy. development Inbalanced land A chaotic public forum to consult on a proposal for North East New supply between Territories New Development Areas119 initiated a debate on land shortage indigenous problems. In response the government released updated land supply villagers and the fi gures, in which about 70% of public land was reserved for small houses wider community (932.9 hectares) as opposed to 30% for urban housing (391.5 hectares). The disproportionate allocation of land for small houses in this case refl ects not only the government’s continued deference to the interests of indigenous villagers but also its defi ciency in long term land planning for rural development and the housing needs of the majority of the population.

Ensuring land use The government should produce a comprehensive zoning plan for the whole balance by rural of the rural New Territories as well as formulate rural planning policies to comprehensive ensure better utilisation of rural land resources and balance the interests of zoning plan and indigenous villagers and the wider community. In this context, review of the rural planning land allocated for village housing should be part of the plan. policies 6.3.2. Relaxation of planning controls in environmentally sensitive areas Protecting The Interim Criteria adopted by the TPB in 2007 have removed the environmentally restrictions on small house development on green belt, some of it sensitive areas environmentally sensitive, adjacent to V zones. This lack of planning control by DPA or zoning results in haphazard erection of small houses in unsuitable areas, causing as Conservation environmental and other impacts. Areas with environmentally sensitive Areas habitats should be protected under the DPA or zoned as Conservation Areas.

6.3.3. Lack of planning for abandoned farmland Protecting The lack of statutory plans covering rural areas has resulted in illegal abandoned dumping and excavation of farmland and fi sh-ponds. Government needs rural land by to expedite the comprehensive coverage of the rural New Territories by extending the statutory plans. coverage of statutory plans

6.4 Land resources

6.4.1. Inconsistent and fragmented fi gures on land availability Accurate and Government needs accurate and up-to-date estimates on the amount of land updated land available for small house development, both private and government land. supply fi gures are needed 6.4.2. Lack of mechanism for forecasting the demand for small houses Under the SHP, there is no mechanism for forecasting the demand for small No offi cial houses, and there is no way of verifying the HYK’s 2003 estimate of 240,000 systematic male indigenous villagers eligible for the grant, or individual village heads’ estimation of the estimates of their own villages’ small house demands. demand for small house but rely Lands Department claims that there is no estimate as the number changes on village heads’ with births and deaths, while Planning Department relies on the village forecasts heads’ own forecasts, which are often signifi cantly infl ated to facilitate expansion of the V zone.

36 Developing a To ensure proper planning of land resources and expansion of V zones, it is consistent, reliable, essential to have a consistent, reliable, transparent mechanism for forecasting transparent the number of men eligible for small house grants and demand for small mechanism for the houses. demand forecasting 6.4.3. Continued expansion of V zone encroaching on environmentally sensitive areas Review the Planning Department should work with the Environment Protection Interim Criteria Department to examine ecological impacts on each environmentally sensitive and impact of area caused by small house development and review the Interim Criteria small house on adopted by the TPB. environmentally sensitive areas 6.4.4. Illegal dumping used to acquire extra land Keep updated Lands Department and Planning Department should carry out a survey of photo records of farmland and keep up-to-date aerial photos of the rural New Territories to rural land indicate areas of farmland. Areas that have been illegally infi lled should not be permitted to have small houses built on them.

6.4.5. Unlawful occupation of government land Need better Better monitoring and enforcement by Lands Department is necessary to monitoring and prevent unlawful occupation of government land by small houses. enforcement

6.5 Environment

Enhancing the The Environmental Protection Department and other departments should monitoring use existing provisions in legislation such as the Water Pollution Control through Ordinance (WPCO) to crack down on environmental impacts associated establishing a with small houses, such as septic tanks. They should monitor environmental data bank of rural destruction activities while establishing a data bank to show the degree of destruction related destruction to different rural areas associated with small house development. to small houses

6.6 Governance

6.6.1. Transparency and accountability Open up the SHP The administration should open up the issue for discussion in the community issue for public by initiating public debates and forums. They should set a timetable for the discussion and set review and recommend changes to the policy after consultation with all a timetable for the interest groups. review 6.6.2. Maladministration Enhance To improve the situation, it is necessary to resolve the overlap between cooperation and departments and strengthen their co-ordination as well as clarify co-ordination misconceptions about planning, lands and building regulations and between enforcement. departments

37 6.7 Overall

A special Given the many serious and ongoing problems highlighted in this report it team of cross- is recommended that a special team with members seconded from Planning departments to Department, Lands Department and Environmental Protection Department tackle the SHP is set up to tackle the problems in a co-ordinated and dedicated way. This issues would involve systematic surveys and systematic enforcement etc.

Table 3: Summary of recommendations Problems Recommendations 1. Constitutional 1.1. Absence of interpretation Government to ask courts for legal of Article 40 of the Basic interpretation when the opportunity arises Law 1.2. Discriminatory nature of Extending SHP to women or other groups is the policy not justifi ed if the policy is wrong in principle

2. Corruption and property speculation 2.1. No geneological records Lands Department to carry out detailed or system to verify investigations, including checking the family indigenous villagers’ tree/clan book, ownership of private lots in claims the New Territories dating back to the Block Government Lease, inscriptions appearing in Chi Tong and on ancestral graves; specify the penalty for making a false declaration 2.2. Selling small houses soon Include a moratorium clause on the removal after CCs issued of the restriction on alienation from the conditions of small house grants and provide additional procedures for carrying out further investigation when information arises on possible breaches of license conditions 2.3. Unlawful trading of small Lands Department to investigate the house rights operation and recommend ways to block the loopholes

3. Planning 3.1. Absence of comprehensive Government to produce a comprehensive development plan for zoning plan for the whole of the rural New rural New Territories and Territories as well as formulate rural planning lack of statutory plans for policies many villages 3.2. Relaxation of planning Areas with environmentally sensitive habitats controls where no trees to be protected under the DPA or zoned into are felled Conservation Area 3.3. No planning for Government needs to expedite the abandoned farmland comprehensive coverage of the rural New Territories by statutory plans

38 Problems Recommendations 4. Land resources 4.1. Inconsistent and Government to estimate the accurate and up- fragmented fi gures on to-date amount of private and government land available for small land available for small house development house development 4.2. No updated estimate of Government to develop a consistent, reliable, eligible applicants transparent mechanism for forecasting the number of men eligible for small house grants and demand for small houses 4.3. Continued expansion of Planning and Environmental Protection VA encroaching on green Departments to examine ecological impacts belt on each environmentally sensitive area caused by small house development and review the Interim Criteria 4.4. Illegal dumping used to Lands Department and Planning Department acquire extra land to carry out a farmland survey and keep up-to- date aerial photos of the rural New Territories while prohibiting small house development on areas that have been illegally infi lled 4.5. Unlawful occupation of Lands Department to execute better government land monitoring and enforcement

5. Environment Environmental Protection Department and other departments to use existing provisions in legislation to crack down on environmental impacts associated with small houses and keep track of the environmental destruction activities by establishing data bank

6. Governance 6.1. Lack of transparency and Government to open up the issue for accountability discussion by initiating public debates and forums and set a timetable for the review and recommend changes to the policy after consultation with all interest groups 6.2. Maladministration Government to resolve the overlap between departments and strengthen their co- ordination as well as clarify misconceptions about planning, lands and building regulations and enforcement 7. Overall Dedicated team formed by Planning, Environmental Protection, and Lands Departments to address planning, environment and lands enforcement issues

39 Appendix

Table 1. Small house applications processed by the Lands Department Year No. of new No. of No. of No. of applications No. of applications applications applications applications being processed pending received processed approved processing 2002 -- 2,161 ------2003 -- 2,132 ------2004 -- 2,178 ------2005 876 2,310 838 -- -- 2006 1,462 2,614 919 -- 2,902 2007 1,693 2,475 1,083 -- 3,579 2008 1,646 2,491 1,267 -- 3,068 2009 1,787 2,709 1,026 7,665 (30/4) 3,232 (30/4) 2010 1,662 2,768 1,380 9,862 (30/10) 6,339 2011 1,159 2,416 816 6,895 3,360 1972-2011 -- -- 36,912 -- -- Figures of applications processed 2002-2005120 , 2006-2007121 , 2008122 and 2009-2011123 Figures of applications received and approved 2005-2009 and applications being processed and pending processing 2009124 Figures of applications received and approved 2006-2011 and applications being processed 2010125 Figures of applications approved and pending processing 2006-2008126 Figures of applications pending processing 2010127 Figures of applications being processed and pending processing 2011 and accumulated application approved 1972-2011128

Table 2. Small house-related applications processed by the TPB Year No. of applications No. of applications No. of small houses Land area involved in processed approved involved in the the approved cases (ha) approved cases 2007 94 76 101 1.5 2008 121 83 120 1.8 2009 102 60 92 1.7 2010 114 92 110 1.7 2011 163 102 134 2.2 2007-2011 595 413 557 8.9 Figures for 2007-2011129

Table 3. Approved premium assessment applications and collection of premiums by the government Financial year No. of approved applications for Amount of Premiums Collected (HKD) premium assessment 2002/03 275 156,000,000 (approx.) 2003/04 -- -- 2004/05 -- -- 2005/06 436 320,000,000 (approx.) 2006/07 422 375,336,499 2007/08 473 436,636,987 2008/09 476 369,395,116 2009/10 453 369,700,582 2010/11 210 191,589,282 Figures for 2002-2003130, 2005-2008131, 2006-2011132

40 Endnotes

1. The main features are that the building shall neither contain Requirements of the New Territories Exempted Houses”, more than three storeys nor exceed a height of 8.23 metres http://www.hkfsd.gov.hk/eng/source/circular/2006_04.pdf. (27 ft.) and the maximum roofed-over area of the house shall 18. HKSAR Lands Department (2012), “New Territories Exempted not normally exceed 65.03 square metres (700 sq. ft.). Houses: A Guide to Fire Safety Requirements”, http://www. 2. HKSAR Lands Department (2012), “The New Territories Small landsd.gov.hk/en/images/doc/guide_fsr_e.pdf. House Policy – How To Apply For a Small House Grant”, 19. The VEA scheme was introduced in 1981 to provide for better http://www.landsd.gov.hk/en/legco/house.htm. planning of village developments and to cater for the housing 3. Bray, D. (1972). Letter to Heung Yee Kuk from D. C. Bray, needs of the indigenous villagers who do not own land. District Commissioner, New Territories, 29 November1972 , 20. HKSAR GovHK, “LCQ1: New Territories Small Houses”, cited in Hopkinson and Lao (2003)... cited in Hopkinson, Lisa, Press Release, 11 January 2012, http://www.info.gov.hk/gia/ and Lao, Man-lei Mandy (2003), Rethinking the Small House general/201201/11/P201201110359.htm. Policy, Hong Kong: Civic Exchange. 21. Ibid. 4. Bray, D. (2001), Hong Kong Metamorphosis, Hong Kong University Press. 22. HKSAR Planning Department (2012), “Examination of Estimates of Expenditure 2012-13”, Reply DEVB(PL)223, http://www. 5. HKSAR Audit Commission (2002), “Small house grants in the pland.gov.hk/pland_en/press/exam12/pdf_e/223-3491.pdf. New Territories” in Audit Report Chapter 8, 15 October 2002. http://www.aud.gov.hk/pdf_e/e39ch08.pdf. 23. HKSAR GovHK, “LCQ1: New Territories Small Houses”, Press Release, 11 January 2012, http://www.info.gov.hk/gia/ 6. NTEHs refer to buildings in the New Territories that are general/201201/11/P201201110359.htm. exempted from certain sections of the Building Ordinance in respect of building, site formation and drainage works, 24. HKSAR GovHK, “LCQ18: ‘Village Type Development’ Sites”, provided they confi rm to certain rules. The main qualifi cations Press Release, 17 October 2012, http://www.devb.gov.hk/en/ are that the building shall not exceed three storeys or 27 ft. publications_and_press_releases/press/index_id_7408.html. in height and the maximum roofed-over area of the house 25. HKSAR GovHK, “LCQ12: Small House Policy”, Press shall not exceed 700 sq. ft. These houses can be built without Release, 1 December 2010, http://www.info.gov.hk/gia/ the need to employ an authorised person and submit formal general/201012/01/P201012010197.htm. building plans to the Building Authority for approval. Small houses are a type of NTEH but the term small house refers to 26. Legislative Council (2006), “Meeting of the Panel on Planning, those houses built by male indigenous villagers under the SHP. Lands and Works: Background Brief on Processing of Small House Applications and Review of Small House Policy”, http:// 7. HKSAR Offi ce of The Ombudsman (2011), “Direct www.legco.gov.hk/yr05-06/english/panels/plw/papers/ Investigation Enforcement Against Unauthorised Building plw0228cb1-986-1e.pdf. Works in New Territories Exempted Houses”, http://ofomb. ombudsman.gov.hk/doc/DI203.pdf. 27. 劉進圖, “政府擬立法訂丁屋權期限 遲出生不享權利贖權或 需千億特稿”, Ming Pao, 8 February 2005. 8. Hopkinson and Lao (2003), Rethinking the Small House Policy, Hong Kong: Civic Exchange. 28. HKSAR GovHK (2010), “LCQ12: Small House Policy”, Press Release, 1 December, http://www.info.gov.hk/gia/ 9. HKSAR Audit Commission (2002), see note 5. general/201012/01/P201012010197.htm. 10. HKSAR Housing, Planning and Lands Bureau (2007), “Follow- 29. Legislative Council (2011), “Offi cial record of proceedings: up to Public Accounts Committee Report No.39: Small House 18 May 2011”, http://www.legco.gov.hk/yr10-11/english/ Grants in the New Territories”, http://www.legco.gov.hk/ counmtg/hansard/cm0518-translate-e.pdf. yr06-07/english/pac/reports/47/app_6.pdf. 30. As explained by the Lands Department, there is no estimate 11. Legislative Council (2006), “Panel on Planning, Lands and of the number of indigenous villagers because the number Works – Processing of Small House Applications and Review will change with the birth, ageing and passing away of the of Small House Policy”, http://www.legco.gov.hk/yr05-06/ indigenous villagers, and not all eligible indigenous villagers english/panels/plw/papers/plw0228cb1-951-3e.pdf. aged 18 years or above will submit an application because 12. Legislative Council (2003), “LegCo Members’ Meeting With whether or not an indigenous villager will apply for a small Councillors of Heung Yee Kuk - Issues Relating to the Progress house grant is a matter for the individual according to his own in Processing Small House Applications” http://www.legco.gov. circumstances and wishes. hk/yr02-03/english/panels/plw/papers/plwcb1-2482-1e.pdf. 31. Cheung, Chi-fai, “About-turn on stream zoning angers 13. HKSAR Planning Department (2007), “Interim Criteria for greens”, South China Morning Post, 5 December 2011. Consideration of Application for New Territories Exempted 32. Anon., “鄉局擬興訟釐清原居民權益”, Wenweipo, 24 March House (NTEH)/ Small House in the New Territories” 2005. 14. HKSAR Planning Department (2007), “Interim Criteria for 33. Except in certain cases e.g. when the husband is certifi ed to Consideration of Application for New Territories Exempted be insane. House(NTEH)/Small House in New Territories”, http://www. info.gov.hk/tpb/en/forms/Technical_Doc/app_nteh_e.pdf. 34. There are many villages in Hong Kong that are not on the list of ‘recognised villages’ approved by the Lands Department 15. HKSAR Planning Department (2007), “Proposal to Streamline even though settlements existed in these areas in 1898. In such Small House Application Procedure”, http://www.info.gov.hk/ villages New Territories Exempted Houses which look similar to gia/general/200709/05/P200709050153.htm. small houses may be built by non-indigenous villagers although 16. HKSAR Housing, Planning and Lands Bureau (2007), “Follow- a full premium is charged by the government. up to Public Accounts Committee Report No.39: Small House 35. Legislative Council (1997), “Minutes of the Bills Committee on Grants in the New Territories”, http://www.legco.gov.hk/ the Equal Opportunities (Family Responsibility, Sexuality and yr06-07/english/pac/reports/47/app_6.pdf. Age) Bill, Equal Opportunity (Race) Bill and Sex and Disability 17. HKSAR Fire Services Department (2006), “Guidelines Discrimination (Miscellaneous Provisions) Bill 1996”, 1 April, on Specifi cations, Installation and Maintenance of Fire 1997. Service Installations and Equipment for the New Fire Safety

41 36. For more details on the discriminatory nature of the SHP, see 65. HKSAR Development Bureau (2011), “Enforcement Policy Hopkinson and Lao (2003) (see note 8). Against Unauthorised Building Works at New Territories Village Houses”, http://www.devb.gov.hk/en/publications_ 37. HKSAR Audit Commission (2002), see note 5. and_press_releases/press/index_id_6897.html. 38. Anon., “新登記116名原居選民/村長參選人入稟質疑族譜”, 66. HKSAR GovHK, “LCQ5: Unauthorised Building Works in Singpao, 19 December 2010. Village Houses in New Territories” Press Release, 18 May 39. Anon., “丁權有價/假丁改族譜圖利”, Hong Kong Economic 2011, http://www.info.gov.hk/gia/general/201105/18/ Times, 3 November 2011. P201105180264.htm. 40. Anon.,“串謀假原居民詐騙/中介人認罪”, Hong Kong 67. Ng, Joyce, and Cheung, Chi-fai, “Village demand for land Economic Times, 20 July 2005. ‘infi nite’”, South China Morning Post, 3 November 2011. 41. Anon., “潛逃經紀假丁權詐騙囚30月”, Hong Kong 68. This assumes a 250 sq. m. (2960 sq. ft.) footprint per house Commercial Daily, 26 October 2010. (including area for open space and circulation). Lai (2000), 42. Anon., “鄉選引入防貪造就新勢力/政黨趁機扶植鄉郊力量”, cited in Hopkinson and Lao (2003). Sing Tao Daily, 25 September 2003. 69. In 2003 the Hung Yee Kuk estimated the number of IVs with 43. Anon., “原居民村代表涉甚多經濟利益”, Apple Daily, 19 entitlements. Leung, A. (2003), cited in Hopkinson and Lao March 2011. (2003). 44. HKSAR Audit Commission (2002), “Small house grants in the 70. Wong, Olga, “Move to let villagers build on green belts”, New Territories” in Audit Report Chapter 8, 15 October 2002. South China Morning Post, 5 September 2007. http://www.aud.gov.hk/pdf_e/e39ch08.pdf. 71. Anon., “村外地批建丁屋10年43公頃,全港1/3丁屋料用作轉 45. Ibid. 售”, Ming Pao, 4 January 2011. 46. Cheung, Chi-Fai, “Pledge to tackle demand for village 72. Cheung, Chi-fai, “Owner of NT dump site set to be ‘rewarded’”, houses”, South China Morning Post, 10 December 2002. South China Morning Post, 27 May 2010. 47. Legislative Council (2003), “Small House Grants in the New 73. 馬耀森, “泥頭「淹」農地變本加厲投訴無門”, Ming Pao, 29 Territories”, supplement to Public Accounts Committee December 2004. Report 39, http://www.legco.gov.hk/yr02-03/english/pac/ 74. Anon., “鄉事會擬資助村民清泥頭, 河上鄉11地主指不知農地 reports/39/39_7_4.pdf. 受破壞”, Ming Pao, 25 July 2009. 48. Legislative Council (2012), LC Paper No. CP 443/11-12, http:// 75. Anon., “鹿頸濕地慘被填平方便起丁屋”, Oriental Daily, 3 www.legco.gov.hk/yr11-12/english/redress/ombuds/minutes/ October 2009. omb20111213.pdf. 76. Anon., “Single authority the key to proper urban planning”, 49. Anon., “丁權黑市買賣港府漠視”, Oriental Daily, South China Morning Post, 21 February 2010. 14 December 2011. 77. 莫麗珊, “村屋斬樹霸官地僭建”, Oriental Daily, 28 June 2010. 50. Wong, Olga, “Villagers cash in at new estate”, South China 78. Anon., “ Morning Post, 8 May 2012. 業權人方便建屋擅建小橋市民投訴侵佔官地破壞環 境”, Apple Daily, 5 April 2011. 51. Hansard, Meeting to discuss the Buildings Ordinance 79. , “ 18 ”, Hong Kong (Application to the NT) (Amendment) regulations 1972, 29 譚敏聰及辛佩蘭 大棠荔枝山莊,霸官地 年 Economic Times, 19 April 2012. November 1972, cited in Hopkinson and Lao (2003). 80. HKSAR Audit Commission (2012), “Unlawful Occupation of 52. Wu, Helen, “Villagers hit zoning wall over Tai Po Park”, South Government Land”, http://www.aud.gov.hk/pdf_e/e58ch07. China Morning Post, 4 February 2008. pdf. 53. Evans, Annemarie, and Chan, Kobi, “Villagers trapped with 81. Anon., “ ”, Oriental Daily, 19 April 2010. road to nowhere – again”, South China Morning Post, 逾萬呎農地遭非法堆填 5 September 2009. 82. Anon., “逾百大樹被伐環保災難”, Oriental Daily, 5 April 2009. 54. Anon., “元朗兩村逢大雨必水浸屬私人土地,政府部門束手無 83. Cheung, Chi-fai, and Martin, Michael, “Diggers sent to rural 策”, Apple Daily, 11 July 2005. site before approval given”, South China Morning Post, 28 July 2010. 55. Anon., “院旁空地雜草亂生,露天垃圾站傳腐臭”, Ming Pao, 6 October 2005. 84. Anon., “150棵朴樹樟樹遭砍伐”, Oriental Daily, 7 February 2009. 56. Anon., “元朗改善排污恐要等50年”, Oriental Daily, 16 May 2008. 85. Anon., “破壞生態環署幫兇,五衙門填溪建丁屋”, The Sun, 28 January 2004. 57. See note 13. 86. Cheung, Chi-fai, and Lee, Ken, “Eco-vandals block village 58. Wong, Olga, “Concerns deepen on village housing”, South stream”, South China Morning Post, 14 January 2008. China Morning Post, 5 September 2007. 87. Anon., “ 59. Anon., “Don’t make NT village sprawl any worse”, South 環團反對蓮麻坑河保育降格 不滿緩衝區改「綠化地 ”, Sing Tao Daily, 5 December 2011. China Morning Post, 5 September 2007. 帶」建丁屋 88. Cheung, Chi-fai, “About-turn on stream zoning angers 60. Anon., “鄉村路窄,阻消防車救命”, Oriental Daily, 28 March greens”, South China Morning Post, 5 December 2011. 2012. 89. Merry, Malcolm (2012), “Indigenous Rights in Disrepute: 61. Anon., “丁屋違規僭建八年前應整頓”, Hong Kong Daily, The Curious Case of Hong Kong”, presented at Australasian 27 August 2004. Property Law Teachers Conference 2012, The University of 62. Anon., “丁屋拆僭建,需時近百年,地政署屋宇署,被轟互相卸責 Hong Kong. 執法不力”, Sing Pao, 27 August 2004. 90. Yeung, Chris, “Taking care of rural business”, South China 63. HKSAR Offi ce of The Ombudsman (2011), “Direct Morning Post, 26 April 2006. Investigation Report: Enforcement Against Unauthorized 91. Merry, Malcolm (2012), see note 89. Building Works in New Territories Exempted Houses”, http://ofomb.ombudsman.gov.hk/doc/DI203.pdf. 92. HKSAR Audit Commission (2002), HKSAR Offi ce of The Ombudsman (2011) and Hopkinson and Lao (2003), see notes 64. HKSAR Building Department (2012), “Guidelines on the 5, 7 and 8 respectively. Reporting Scheme for Existing Unauthorized Building Works in NTEH”, http://www.bd.gov.hk/english/documents/ guideline/NTEH_GL01.pdf.

42 93. Violations include applicants making false declarations to the 119. HKSAR Planning Department (2012), “North East New Lands Department that misrepresent their true intentions, Territories New Development Area Planning and Engineering making false declaration of genuine indigenous village status, Study”, http://www.nentnda.gov.hk/eng/index.html. and unlawful trading of small house rights. 120. Legislative Council (2006), “Panel on Planning, Lands and 94. HKSAR Audit Commission (2002), Cheung (2010) and HKSAR Works – Background Information of processing of small Audit Commission (2012), see notes 5, 72 and 80. house applications and review of Small House Policy”, http:// www.legco.gov.hk/yr05-06/chinese/panels/plw/papers/ 95. 王嘉嘉、黃勁文, “林太斥丁權無限多 困擾政府有男丁兩代 plw0228cb1-986-1c.pdf. 未動用 第3代置業難逼建屋”, Hong Kong Economic Times, 3 November 2011. 121. HKSAR Development Bureau (2008), “Examination of Estimates of Expenditure 2008-09”, http://www.devb. 96. Leung, Paggie, “Villagers home in on profi ts”, South China gov.hk/fi lemanager/en/share/legco_matters/fi nance_ Morning Post, 18 May 2011. committee/2008/replies2008_supplementary_e.pdf. 97. Different politicians’ views can be found in LegCo minutes 122. HKSAR Lands Department (2010), “Controlling Offi cer’s and news reports. Report for Estimates of Expenditure of 2010”, http://www. 98. Conservancy Association, Designing Hong Kong, Friends of budget.gov.hk/2010/eng/pdf/head091.pdf. the Earth, Friends of Sai Kung, Green Lantau Association, 123. Legislative Council (2012), “Replies to Initial Written Questions Green Power, Hong Kong Bird Watching Society, and WWF Raised by Finance Committee Members in Examining the Hong Kong, “A joint letter to the government submitted Estimates of Expenditure 2012-13”, http://www.legco.gov.hk/ by Green Groups - Green Groups’ responses to the case yr11-12/english/fc/fc/w_q/devb-pl-e.pdf. of Ho Sheung Heung’s illegal dumping and small house application”, 18 June 2010. 124. HKSAR Development Bureau, “LCQ19: Applications for Construction of Small Houses”, Press Release, 27 May 2009, 99. 陳文敏, “新界丁屋”, Ming Pao, 4 April 2012. http://proxy14. http://www.devb.gov.hk/en/publications_and_press_releases/ hkreporter.com/talks/viewthread.php?action=printable&t press/index_id_5367.html. id=1528218. 125. HKSAR GovHK, “LCQ12: Small House Policy”, Press Release, 100. Anon., “劃期限須改基本法”, Oriental Daily, 15 June 2012. 1 December 2010, http://gia.info.gov.hk/general/201012/01/ http://orientaldaily.on.cc/cnt/news/20120615/00176_015. P201012010197_0197_72304.pdf. html. 126. HKSAR GovHK, “LCQ9: Vetting and approving applications 101. Anon., “學者質疑交叉演繹缺法理”, Wenweipo, 15 June 2012. for the construction of small houses”, Press Release, 102. His assumption is that each 700 sq. ft. house needs 2,000 sq. 26 November 2008, http://www.info.gov.hk/gia/ ft. area for building, gardens and roads. general/200811/26/P200811260109.htm 103. His assumption is that each 700 sq. ft. house is built on a 750 127. HKSAR GovHK, “LCQ12: Small House Policy”, Press Release, sq. ft. site. This is a very optimistic assumption equivalent to a 1 December, 2010, http://www.devb.gov.hk/en/sdev/press/ housing density of 144 small houses per hectare, and would index_id_6304.html. leave very little space for open space or other amenities. 128. HKSAR GovHK, “LCQ1: New Territories Small Houses”, 104. Ng, Joyce “Land supply enough for years to come”, South Press Release, 11 January 2012, http://gia.info.gov.hk/ China Morning Post, 18 October 2012. general/201201/11/P201201110359_0359_88944.pdf. 105. Guo, Jia-xua “NT protests trigger urban backlash”, China 129. HKSAR GovHK, “LCQ18: ‘Village Type Development’ Sites”, Daily, 1 December 2011. Press Release, 17 October 2012, http://www.devb.gov.hk/en/ 106. 盧峯, “蘋論：僭建絕不是傳統合法權益”, Apple Daily, 2 June publications_and_press_releases/press/index_id_7408.html. 2011. 130. Legislative Council (2003), “Small House Grants in the New 107. 黃永, “僭建丁屋的三層次矛盾”, 18 May 2011, http:// Territories”, supplement to Public Accounts Committee www.881903.com/blog/front/blogdetail.aspx?blogid=77& Report 39, http://www.legco.gov.hk/yr02-03/english/pac/ postid=32148. reports/39/39_7_4.pdf. 108. Hopkinson and Lao (2003), see note 8. 131. HKSAR GovHK, “LCQ9: Vetting and approving applications for the construction of small houses”, Press Release, 109. Koon Ping Leung v Director of Lands (2012) 2 HKC 329 cited 26 November 2008, http://www.info.gov.hk/gia/ in Merry (2012). general/200811/26/P200811260109.htm. 110. Merry (2012), see note 89. 132. HKSAR GovHK, “LCQ12: Small House Policy”, Press Release, 111. Ibid. 1 December 2010, http://gia.info.gov.hk/general/201012/01/ P201012010197_0197_72304.pdf. 112. See the discussion of the case of Chan Wah v. Hang Hau Rural Committee and Others (1999) in Hopkinson and Lao (2003). 113. See note 70 in Hopkinson and Lao (2003). 114. As explained by the Lands Department, a doubtful case is one where the information provided by the small house grant applicant is insuffi cient to establish his indigenous villager status, for example, applications from ‘moved and settled’ villagers. 115. HKSAR Audit Commission (2002), see note 5. 116. Legislative Council (2006), “Public Accounts Committee Report 45” Part 3, paragraph 29, http://www.legco.gov.hk/ yr05-06/english/pac/reports/45/45_rpt.pdf. 117. Legislative Council (2003), “Small House Grants in the New Territories”, supplement to Public Accounts Committee Report 39, http://www.legco.gov.hk/yr02-03/english/pac/ reports/39/39_7_4.pdf. 118. HKSAR Audit Commission (2002), see note 5.

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