The Joint Declaration
TheNew Territories Leases (Extension) Ordinance (Cap. 150, Laws of Hong Kong)
Most of the non-renewable leases referred to in Annex III to the Joint Declaration are in respect of land in theThe Basic Law
TheLand Grant Arrangement since 1 July 1997
Shortly after the reunification and the establishment of the Government of the Hong Kong Special Administrative Region (HKSAR), the Government formulated its first land policy according to Annex III of the Joint Declaration. On 15 July 1997, the Executive Council endorsed various provisions covering land leases and related matters. Among other things, new leases of land to be granted (except new special purpose leases and short term tenancies) should be for a term of 50 years from the date of grant at a premium, and subject to the payment, from the commencement of the lease, of an annual rent equivalent to 3% of the rateable value from time to time of the land leased. Non-renewable leases may, upon expiry and at the sole discretion of HKSAR Government, be extended for a term of 50 years without payment of an additional premium, but an annual rent shall be charged from the date of extension equivalent to 3% of the rateable value from time to time of the property.Government Rent (Assessment and Collection) Ordinance (Cap. 515, Laws of Hong Kong)
Since the coming into force of the Joint Declaration, new land grants contain a standard condition that the lessee is required to pay an annual rent, from 1 July 1997, equal to 3% of the rateable value from time to time of the land leased. But, neither Cap. 150 nor the conditions of Government land leases provide sufficient details regarding the assessment, payment and collection of Government rent, or any rights for the rent payer to make objection and appeal against the assessment. To help administer the assessment and collection of Government rent, the Government Rent (Assessment and Collection) Ordinance (cap. 515 of the Laws of Hong Kong) (hereinafter referred to as the “Rent Ordinance”) was enacted on 30 May 1997 and, under Section 34, a subsidiary legislation, the Government Rent (Assessment and Collection) Regulation, was made on 6 June 1997 to codify and standardise the practices and procedures for assessment and collection of Government rent. The Rent Ordinance applies to interests in land held under – (a) a lease extended by the operation of Section 6 of the New Territories Leases (Extension) Ordinance, Cap. 150; and (b) a lease under which there is an express obligation to pay an annual rent of an amount equal to 3% of the rateable value from time to time of the land leased.Different Types of Government Rent
As from 1 July 1997, there are generally four different types of Government rent collected from different leaseholders depending on the terms of their respective Government leases, namely,Government Leases Ordinance (Cap. 40, Laws of Hong Kong)
Background Renewable leases of land contain a right of renewal for a further term, exercisable by the lessee, at “a rent to be fixed by the Director of Public Works as the fair and reasonable rental value of the land at the date of such renewal”. This practice of granting renewable leases was first introduced in the 1880s. Generally, the lease terms were 75 years renewable for a further 75 years or 99 years renewable for a further 99 years. However, sharp increases in property rents in the early 1970s gave rise to strong opposition from leaseholders to the payment of the full market rental value of the land, as required by the lease conditions, for the renewal term. In view of this situation, Government introduced a number of alternative methods of renewal. Finally, on 14 December 1973, the Crown Leases Ordinance, now re-titled the Government Leases Ordinance (cap. 40 of the Laws of Hong Kong), came into operation. The Ordinance provided that for the renewal term, a leaseholder should pay an annual rent equivalent to 3% of the rateable value of the land at the date of renewal of the lease. The Cap. 40 rent so assessed would remain unchanged throughout the renewal term unless and until the land was redeveloped, in which case it would be re-assessed at 3% of the rateable value of the interim valuation of the new building erected on the land.Administration of the Government Rent (Assessment and Collection) Ordinance (Cap. 515, Laws of Hong Kong)
Liability for Payment
Section 6 of the Rent Ordinance provides that the lessee of a Government lease, which is subject to the application of the Ordinance (hereinafter referred to as the “applicable lease”), is liable to pay Government rent. The lessee for this purpose includes the owner of an undivided share in the land leased. Where undivided shares of the land have been assigned to individual tenements in the building erected on the land and the tenements have been assessed to rates, the Commissioner is authorised to demand the Government rent from ratepayers of the tenements by issuing combined demand notes for rates and Government rent, even though the ratepayers may not be the owners of the tenements. If a person other than the owner of a tenement pays the Government rent for the tenement, the rent paid by the person is a debt due to the person by the owner unless there is an express agreement between the owner and the person requiring otherwise.Rateable Value of Land Leased
Section 7 provides that the rateable value of the land leased under an applicable lease is an aggregate of the rateable values of the tenements comprised in the land leased.Valuation of Land and Tenements
Section 8 empowers the Commissioner to value land held under an applicable lease and any tenement comprised therein at any time to ascertain the rateable value for the purposes of the Ordinance. Subject to any specific provisions of the Ordinance, the basis of ascertaining the rateable value is the same as that in Sections 7 and 7A of the Rating Ordinance. Where the estimated rateable value does not exceed the minimum rateable value, the rateable value shall be deemed to be $1 and no demand for Government rent will be issued. That minimum rateable value, presently set at $3,000, is the same as the amount prescribed under Section 36(1)(l) of the Rating Ordinance for rates exemption purposes.Assessability of Development and Redevelopment Sites
Where a site is vacant pending development or redevelopment or is undergoing development or redevelopment, the site is not assessable to rates. However, the site is assessable to Government rent by virtue of Section 8 of the Rent Ordinance and Sections 2 and 4 of the Government Rent (Assessment and Collection) Regulation. The legality of assessing development sites and redevelopment sites to Government rent was confirmed by the Court of Final Appeal in its judgment in ''Commissioner of Rating and Valuation v Agrila Limited & 58 othersGovernment Rent Roll
The provisions in the Rent Ordinance regarding the direction for the Commissioner to prepare a new Government Rent Roll, the designation of a valuation reference date, the particulars of tenements entered into the Government Rent Roll, the form of the Government Rent Roll and the display of the Government Rent Roll for public inspection are similar to those for the Valuation List under the Rating Ordinance.Collection of Government Rent
The Commissioner is responsible for the collection of Government rent payable under the Rent Ordinance and the Director of Lands is responsible for taking enforcement action in case of default in payment. The Director of Lands may take proceedings to re-enter the land should the Government rent for the land or any surcharges thereon remain unpaid. Similar to the frequency of demanding rates under the Rating Ordinance, Government rent is payable quarterly in advance to the Commissioner in the first month of each quarter. Where the Government rent has not been paid on or before the due date, a surcharge of 5% may be added to the amount due and, if not paid within 6 months from the original due date, a further surcharge of 10% will be added on all amounts outstanding.Objections and Appeals
The provisions in the Rent Ordinance regarding proposals to alter the Government Rent Roll, objections to correction, deletion or interim valuation and appeals to the Lands Tribunal against the decision of the Commissioner are similar to those provided under the Rating Ordinance.General Powers of Commissioner
The provisions in the Rent Ordinance and the Rating Ordinance are generally the same in respect of the power to obtain information from the owner or the occupier of a tenement, the power to extend the time limit for returning a requisition for particulars of tenements, the commission of offences for refusal to give information or obstruction or provision of false or incorrect information, and the penalties for such offences.Comparison of Rates and Government Rent under Cap. 515
A schedule comparing the similarities and differences between rates and Government rent is set out in the following table. Comparison of Rates and Government RentGovernment Rent Case Law
Legality to assess Development and Redevelopment Sites to Government rentReferences
{{Reflist Rating and Valuation Department, The Government of the Hong Kong Special Administrative Region http://www.rvd.gov.hk Government Rent (Assessment and Collection) Ordinance (Cap. 515) http://www.legislation.gov.hk/blis_ind.nsf/WebView?OpenAgent&vwpg=CurAllEngDoc*508*100*515.1#515.1 Property Rates in Hong Kong, Assessment, Collection and Administration Chapter 12 published by Rating and Valuation Department, Hong Kong Special Administrative Region Government http://www.rvd.gov.hk/en/doc/property_rates.pdf Lands Department, The Government of the Hong Kong Special Administrative Region http://www.landsd.gov.hk/en/about/welcome.htm Local taxation in Hong Kong