Media

HKU Scholars Propose on Ensuring Compliance with "Planning Conditions" in Property Development

15 Feb 2008

 

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A study by researchers of the Department of Real Estate & Construction (REC) of The University of Hong Kong (HKU) (see Footnote 1) revealed that the present system of imposing planning conditions by the Town Planning Board (TPB) for projects approved under the Town Planning Ordinance has a number of practical problems that need to be addressed in the interest of the public.

Planning conditions are imposed to minimize potential adverse environmental impact of development and to ensure that the development can bring about certain "planning gain" to the neighbourhood. They can be impact studies or such requirements as tree planting, footbridges across streets, and landscaped open space. They can be physically part of or outside the development.

The study, led by Professor Lawrence Lai, was one of the tasks of a two-year study funded by the Public Policy Research grant of the Research Grants Council. The study is scheduled for completion in August 2008. A total of 82 major residential development projects in Comprehensive Development Area Zones involving 363 planning applications approved by the TPB during 1 January 1998 to December 2005 were inspected to check if they fulfill planning conditions.

The major findings and the proposals are as follows:

Interesting Facts Observed

1. The overall compliance rate in Hong Kong was much better than that in the UK.

2. Some developers had yet to comply with some of the planning conditions even when these conditions had become part of the land lease, the liability for which may eventually fall on the small owners.

3. Many more developers have complied with all planning conditions, even when they did not become part of the lease. This meant that there is a theoretically interesting self-enforcing incentive for developers.

No Time Limit of Compliance

1. There has been a long standing practice for the TPB to not delimit the time frame within which a planning condition must be fulfilled for an approved development.

2. However, we can legitimately expect a developer to fulfill all planning conditions before the last property unit in its development is sold out. Also, we may use the standard of a reasonable consumer (i.e., an occupant of a development) to judge if any apparent non-compliance is simply a reasonable delay, mere negligence or a deliberate attempt to not comply with or frustrate planning conditions within reasonable time.

No Statutory Enforcement Mechanism

1. In any event, there is no statutory enforcement of planning conditions (apart from the Building Authority's refusal to issue an occupation permit). Thus, government enforcement can only be possible if these conditions are incorporated into a land lease.

2. However, incorporating planning conditions into a land lease is only feasible when a developer needs to obtain permission to modify the lease to accommodate a new development. If the lease needs no modification, there is no way the Lands Department can impose any planning conditions as part of the new lease terms.

3. Even when a lease can be modified, the Lands Department may choose not to incorporate all, if any, planning conditions.

4. When planning conditions are incorporated as lease terms, the terms may or may not specify a time limit for compliance.

5. If planning conditions are not part of a land lease, compliance with planning conditions is up to the goodwill of the developer or subsequent buyers of the land.

Consequences of Non-compliance

1. When compliance amounts to a breach of a lease or a breach of a town plan (in which Comprehensive Development Area zoning, in relation to those planning conditions, are part of an approved Master Layout Plan), there can be a title defect problem for all property units.

2. When all shares in a property have been sold to individual "small owners" and where the conditions run with the land, the new owners of the property (and no longer the developer's subsidiary firm which executes the development, which, in most cases, has been liquidated as soon as the project is completed) have the obligation to fulfill those conditions. Most property buyers in Hong Kong may not have thought about this liability, which is problematic because there is no time limit for the fulfillment of planning conditions, a situation that allows a developer the chance to not fulfill its expected obligations.

Proposals

1. The Town Planning Ordinance should be amended to impose a penalty on the director of a developer or its holding company for non-fulfillment or unreasonable delay in fulfillment of planning conditions relating to the construction or preservation of physical structures. This liability ends when the conditions are fulfilled, which is evidenced by the TPB's issue of a "certificate of compliance with statutory planning requirements".

2. A developer should fulfill planning conditions within a reasonable amount of time specified by the TPB.

3. An extension of time may be granted on a case-by-case basis.

4. For planning conditions for the construction or preservation of certain works or any other items, a sum decided by the TPB should be deposited with the government, which should forfeit this sum to carry out any works a developer fails to comply with within a reasonable amount of time. The developer would thereby be liable to pay the difference in any deficiency. Any balance remaining from this sum should be returned to the developer upon the TPB's issue of the said certificate of compliance.

5. Public consultations on the above proposals should be carried out.

6. The Planning Department and Lands Department (when appropriate in connection with any breach of lease terms) should dedicate a special team to audit compliance with planning conditions.

7. The Building Department should check carefully if planning conditions are fulfilled before issuing occupation permits.

Follow Up Actions

The researchers will further develop their ideas and findings and intend to submit a report to the TPB in due course.

Photo Caption: (From left) Mr Leung Hing Fung, Associate Professor, Department of REC; Dr Daniel Ho, Head, Department of REC; and Professor Lawrence Lai, Professor, Department of REC

Footnote 1:-
Lai, L.W.C., Yung, P., R.Y.M. Li, and Ho. D.C.W. (2007) "The Private Supply of and Public Demand for Planning: Compliance with Planning Conditions in the Absence of Direct Statutory Enforcement Measures." Planning Policy and Research. Vol.22, No.4, pp.535-557. This is to further develop the ideas in Lai, L.W.C., Ho, D.C.W., and Leung, H.F. (2005), "Planning Conditions in Hong Kong: an Empirical Study and a Discussion of Major Issues," Property Management, Vol.23, No.3, pp. 176-183. For factual details, please see Lai, L.W.C., Liu, K.T. and Yung, P (2008 forthcoming), "Planning Conditions for Comprehensive Development Area Zones: a technical note on a survey on factual compliance and the deposit of associated master layout plans at the Land Registry," Planning and Development.

For media enquiries, please contact:
- Dr Daniel Ho, Head, Department of Real Estate & Construction, HKU (Tel.:- Office: 2859 2146 / E-mail: danielho@hku.hk); or
- Ms Denise Wong, Manager (Media), External Relations Office, HKU (Tel:- 2859 2600 / E-mail: denise.wong@hku.hk)