Lawmaker Jeffrey Lam Kin-fung, who chaired the committee studying the bill, said the new regulation would ease cumbersome renewal procedures and benefit banks in the mortgage business.
“It will give investors, especially newcomers, a shot in the arm in confidence in Hong Kong’s long-term investments,” he told the Post on Monday. “This is particularly important at a time when the city wants to attract more family offices and promote the Greater Bay Area market.”
The bay area is Beijing’s plan to turn Hong Kong, Macau and nine cities in Guangdong province into a hi-tech economic powerhouse.
There are 2,400 leases due to expire from June 2025 to June 29, 2047. About 300,000 leases are due to expire on June 30, 2047, mostly in the New Territories.
Stewart Leung Chi-kin, chairman of industry body the Real Estate Developers Association of Hong Kong, said the new measure to handle expired leases would eliminate uncertainty.
“People need not speculate … after the new arrangement takes effect,” he said.
Under the bill, expired leases will be automatically rolled over for another 50 years unless owners opt out through a new statutory mechanism, which the government has said will handle a large number of renewals in a more streamlined and efficient manner.
Leases to be renewed will not require any payment of land premium, but will be subject to an annual rent equivalent to 3 per cent of the rateable value of the land.
“This is acceptable and logical,” said Leung, who is also chairman of developer Wheelock.
Instead of executing a new lease with each and every owner of a property individually, the government will ditch this conventional practice and collectively put in gazette notices of the extension of leases six years before expiry.
Authorities will also tell the public through both Chinese- and English-language newspapers. Renewals will also be published on the website of the Lands Department.
Lawmaker Lam said he received positive feedback when marketing the bill to foreign investors.
“There was a foreign investor who told me: ‘The great news is about Hong Kong’s autonomy and freedom being extended for another 50 years’,” Lam said, adding that the measure reflected that the city’s “one country, two systems” governing principle would remain after 2047.
Secretary for Development Bernadette Linn Hon-ho said last week that the new renewal mechanism would help maintain property owners and investors’ confidence.
She said the first batch of leases to be automatically renewed would expire in 2031, and gazette notices of renewal of these leases would be put up at the end of December this year.
Linn also expected that very few property owners would choose not to extend leases, although an opt-out option was present if they decided otherwise.
Hong Kong properties owned by foreign entities will require prior written approval for lease extension from the Office of the Commissioner of China’s Ministry of Foreign Affairs in Hong Kong.
