Lower trigger point looms for auction of old buildings

Michael Shum

To speed up urban renewal, the government plans to lower the compulsory sale application threshold for old buildings aged at least 50 years in Wednesday's policy address, according to sources.

Currently, developers can force a compulsory auction to purchase the remaining stake of a building over 50 years old if the developer already owns 80 percent of land titles within that block.

Sources said Chief Executive Carrie Lam Cheng Yuet-ngor will announce in the last policy address of this term that the threshold will be lowered to 70-75 percent.

The lowering of the threshold is expected to help urban renewal and speed up developers' acquisitions as it could avoid "holdouts" - households refusing to move and bargaining for higher compensation during acquisition of properties.

"Developers will often encounter one or two holdouts while acquiring old buildings, preventing the project from crossing the threshold and forcing a compulsory auction. So the reconstruction will be delayed endlessly," a source said.

Ground-floor shops usually are the holdouts as their floor area is more valuable than the residential units above them, and they hold more land titles of the building as well.

"The reconstruction will be delayed when shop owners refuse to move out or bargain for an unreasonable amount of compensation while developers are trying to acquire the building," a source said.

Lawmaker Edward Lau Kwok-fan from the Democratic Alliance for the Betterment and Progress of Hong Kong added that "current old buildings have few units, so it only takes one to two holdouts to cause developers to fail the 80 percent threshold."

He agreed that lowering the threshold will help rebuild old districts, but reminded the government to adhere to the original intention of the legislation.

Lau also proposed that the government relax requirements for the sale of "tso-tong" lands - inherited land for building ancestral halls - in the New Territories, to allow those plots to be sold after obtaining 80 percent, instead of all, of the clan members' approval.

The proposal was echoed by Sheung Shui Rural Committee chairman Bowie Hau Chi-keung, who said it is beneficial to the society as well as the descendants of traditional family organizations to have the requirement relaxed.

michael.shum@singtaonewscorp.com

Editorial: Page 8