The Zhitong Finance App learned that the Hong Kong Development Council will launch the “Additional Land Ratio Pilot Program” in September, which will be implemented first in 7 old districts for a period of 5 years. Private redevelopment sites located in these 7 old districts under the plan and meeting other requirements of the pilot scheme will receive an additional 20% land area ratio to enhance the financial viability of the redevelopment project.
The Secretary for the Development of the Hong Kong Development Council, Ning Hanhao, said that the pilot plan is another initiative to promote private redevelopment projects in old districts after amending the law more than a year ago to lower the threshold for aggressive auctions, and to implement the current administration's innovative and enterprising policy thinking.
Ning Hanhao pointed out that according to data from the past ten years, about 20% of the newly built residential units in redevelopment projects came from the Municipal Construction Bureau, while the remaining 80% came from private development projects, which shows how important it is for the private market to participate in the reconstruction of old buildings. However, due to the acquisition costs involved in redevelopment projects in old districts, and certain restrictions on development parameters for reconstruction in developed areas, market participation is still not active.
Ning Hanhao pointed out that in the face of an annual increase of more than 500 buildings that are 50 years old or more, or even an average of more than 700 buildings over the next 15 years, it is necessary for the authorities to promote market reconstruction with innovative and ambitious policies to cope with the situation where buildings are aging faster than supermarket construction and private market reconstruction, and to reach the policy goals of dealing with hidden dangers in old buildings and improving the living environment, and is happy to see that society and industry generally support this policy measure.
According to the Hong Kong Development Council, the seven old districts are Cheung Sha Wan (the outline zoning plan also covers Sham Shui Po), Ma Tau Kok (including Kowloon City and Tokwawan), Mongkok, Sai Ying Pun and Sheung Wan (under the same outline), Tsuen Wan, Wan Chai and Yau Ma Tei.
Under the pilot scheme, developers who commit to demolish residential buildings located in seven old districts that are 50 years old or older and have a site area of not less than 700 square meters and rebuild them for residential use will be encouraged to be provided with an additional 20% of the total floor area exempt from land prices. Developers can choose to:
(i) Submit a planning application to the City Planning Commission and suggest increasing the total floor area that can be built on the original site to be reconstructed, up to a limit of 20%. If approved, the additional land area ratio is exempt from the land price. The specific implementation arrangement is to calculate the land price value of the additional 20% land area ratio using the standard amount to offset the land price supplement amount for the original site redevelopment project; or
(ii) If it is decided not to add up to 20% of the total floor area at the original site redevelopment site, the additional land area ratio may be converted into a land price value to offset any land transaction carried out by the developer in the original site redevelopment project or in the Northern Metropolitan Area and other parts of Hong Kong, including the land price to be paid for the land investment, title amendment or land exchange project. The relevant land price amount is valid for 10 years, during which time no interest is received, and it cannot be transferred on the market. Nor will the Government pay any redemption, compensation, or similar amounts for any unused amount after the 10-year period expires.
The Hong Kong Development Council stated that the pilot scheme introduced two arrangements to facilitate applications and streamline procedures:
First, before submitting an application, developers can check with the Hong Kong Lands Department and the Planning Department in advance whether the redevelopment site is eligible, the land value of the additional land area ratio, and planning matters.
Second, the Hong Kong Lands Department will calculate the land value of the additional land area ratio using a standard amount. The Department also issued “Homework Preparation No. 9/2026” to establish applicable standard amounts for each of the seven old districts.