Land Administration, Lease Conditions, Land Exchange and Modification
This domain tests whether you can read a Government lease as an operating document - user restriction, building covenant, height and plot ratio limits, surrender and rent - and trace the administrative route when an owner wants something the lease does not allow.
Reading the lease
The lease is the private law instrument between the Government as landlord and the owner. Key elements: the term and any renewal right; the permitted user; the building covenant requiring completion within a stated period; development parameters; the obligation not to surrender or transfer without consent; and Government rent. Since the 1985 leases, Government rent is generally 3 per cent of the rateable value, adjusted, collected under the Government Rent (Assessment and Collection) Ordinance (Cap. 515). Older leases may carry different rent regimes.
Modification, exchange and waiver
- Lease modification alters conditions of an existing lot for a premium reflecting the enhancement in value, usually assessed on the before-and-after basis by the Lands Department.
- Land exchange surrenders existing lots for a new lot, often to assemble a developable site, with premium on the difference.
- Letter A and Letter B entitlements in the New Territories are compensatory entitlements that can be surrendered against premium on a new grant.
- Short term tenancies and temporary occupation licences permit temporary use of Government land; a waiver may temporarily relax a lease restriction.
- The certificate of compliance is issued after the occupation permit and after the lease obligations, including the building covenant, are satisfied.
The enforcement link
Breach of the user restriction or the building covenant can lead to enforcement action, and the Government may re-enter in serious cases. Planning permission under the Town Planning Ordinance does not override the lease, and lease modification does not replace Buildings Ordinance approval. The three tracks run in parallel and must be sequenced deliberately.
Worked example
An industrial lot in Kwun Tong is to become a hotel. The statutory zoning permits the use subject to planning permission; the lease is restricted to industrial purposes with a building covenant already discharged. The route: planning application, lease modification with premium negotiation, then Buildings Ordinance submission for the conversion, then occupation permit and certificate of compliance. Advising the client to submit building plans first is a mark-losing answer, because the lease and planning position defines what may be built.
Traps that cost marks
Assuming planning permission overrides the lease. Ignoring the building covenant. Forgetting Government rent apportionment on modification. Treating the lot area as exact for premium purposes. Confusing a waiver with a modification.