Small House Policy


The Small House Policy was introduced in 1972 in Hong Kong. The objective was to improve the then prevailing low standard of housing in the rural areas of the New Territories. The Policy allows an indigenous male villager who is 18 years old and is descended through the male line from a resident in 1898 of a recognized village in the New Territories, an entitlement to one concessionary grant during his lifetime to build one house.
The policy has generated debates and calls for amendments to be made.

History

The Small House Policy has been in effect ever since 1972 to provide a once-in-a-lifetime small house grant for an indigenous villager who is "a male person at least 18 years old and is descended through the male line from a resident of 1898 of a recognized village which is approved by the Director of Lands". An indigenous villager therefore enjoys small house concessionary rights in building a house of not more than three storeys nor more than 700 square feet, through either Private Treaty Grant, Building Licence or Exchange issued under this policy. These rights were further incorporated into the constitutional framework. It was stipulated in Article 40 of the Basic Law – "The lawful traditional rights and interests of the indigenous inhabitants of the 'New Territories' shall be protected by the Hong Kong Special Administrative Region", creating difficulties to make significant amendments to this policy. By 2016, there are approximately 240,000 small house concessionary rights holders in Hong Kong.
The Small House Policy is a legacy of the British colonial government. In order to cater for the needs of an increasing demand for housing and to prevent another 1967 Riots, the outbreak of which was partly due to people's discontent towards the indifferent attitude of the colonial government toward public welfare, threatening the colonial rule, the colonial government was keen on improving the living conditions of Hong Kong dwellers in the 1970s. One of their plans was to develop new towns in the New Territories, which were later known as Tsuen Wan New Town, Sha Tin New Town, Tuen Mun New Town and so forth. As this would require a large-scale confiscation of land and demolition of housing, David Akers-Jones, the ex-Secretary for the New Territories, implemented the Small House Policy in exchange for the New Territories indigenous groups' support for the new town development. Meanwhile, the government also added some constraints in this policy by launching Restriction on Alienation which required indigenous villagers to pay a premium if they wish to transfer their rights of ownership to non-indigenous villagers within a five-year period.
In 2012, Carrie Lam, now chief executive, called for an end to the Small House Policy. In April 2019, the High Court ruled that two out of three methods for obtaining a small house grant would become banned. The third method, the free building license, would continue to be legal. The Heung Yee Kuk organization advocates for the Small House Policy, and threatened to ask Beijing for help if an appeal to the April 2019 ruling was not granted. In addition, it spent HKD $30M on the first round of judicial review.

Assenting views

As a local policy formulated against the specific historical context of Hong Kong, the Small House Policy has brought some positive effects on both Hong Kong society and the British Colonial Government. The impact could be divided into three categories.
For the colonial government, the Small House Policy helped to ease off the tension between the government and the indigenous inhabitants, and facilitated the land development of the New Territories. Before the engagement of the colonial government, the indigenous inhabitants held the right to private ownership of the land in the New territories, with the permanent land contracted conferred by Qing and Ming government. Through the exchange of "Ding" for ownership, the colonial government lowered the law-enforcement cost in the process of land ownership transformation, and provided opportunities for the current economic development of the New territories. After handover, according to Article 40 of the Basic Law, "the lawful traditional rights and interests of the indigenous inhabitants of the 'New Territories' shall be protected by the Hong Kong Special Administrative Region", the Small House Policy is reasserted by the Chinese Central Government, which helps the Chinese Central Government to win the support of the New Territories indigenous inhabitants to consolidate their rule in Hong Kong, and to show their respect to the traditional norms and culture of Hong Kong.
For the indigenous inhabitants of the New Territories, their benefits are substantial. Firstly, the inhabitants enjoy a hereditary privilege of land usage and housing grant, which is a great advantage regarding Hong Kong's population density and land shortages. Secondly, according to Lands Department of Hong Kong, after a five-year period, the villager can freely sell his property in the market without any restriction. After the grant of ownership transfer, the Small House Policy created huge and direct economic interest for the indigenous inhabitants. These benefits help to create a sense of pride and belonging to the indigenous villages which are useful in forging a bond among the indigenous villagers and to preserve their tradition.
For Hong Kong society as a whole, the Small House Policy also brings some benefits. The policy, to a certain extent, guaranteed a sense of land security against environment pollution and over-exploration, and protected the original natural environment of New Territory during the urbanization and industrialization of Hong Kong. Under the Small House Policy and "Village Type Development" project, the villages in New Territories could keep their traditional lifestyle and features until now.

Dissenting views

Despite the benefits mentioned here above, the small house policy does create a lot of controversies, which can also be divided into three categories.
First of all, the Small House Policy is fundamentally unsustainable. There was already over 14157 outstanding small house grant applications received until 2002, yet the number of potential applicants, who are eligible indigenous male villagers at least 18, is still increasing. It was estimated that the number of indigenous villagers with entitlements was going to reach 240000. In other words, if all of these 240000 entitled villagers were going to apply for small houses, there would be a significant uptake of over 2,200 hectares of Hong Kong’s valuable land resources. However, there is a dwindling supply of land in village areas to develop small houses. The imbalance of supply of land and demand for small houses will remain a major problem of the Small House Policy.
Secondly, the speculative development develops within the Small House Policy framework is found to have gotten more serious. The Audit Commission in 1987 realized the phenomenon that the indigenous villagers kept selling their small houses to the outsiders. The situation has even been more frequent since 2002. On top of the abusive use of this policy, there are some indigenous villagers who are intentionally recruited by private landowners to sell their rights of ownership. According to Lands Department of Hong Kong, indigenous villagers need to sign up a security document, which is to prevent them from taking full advantages of their title to the lot. Yet, there are a significant number of people make declarations, which are in fact misrepresenting their true intentions. They apply for the removal of restriction on alienation while assigning the small houses to the developers so that they can gain benefits from selling their rights. There is also another form of abuse. Although villagers living overseas are not allowed to apply for a small house,it is in fact difficult to determine if the application was made with a local address.
Apart from those controversies regarding the actual exercise of the policy, the nature of the policy is also greatly disputed. The Small House Policy is discriminatory against two groups of people. First of all, the policy was designed to offer male indigenous villagers exclusively a right to apply for small houses. This totally discriminates against the female indigenous villagers, as they are not allowed to apply for a small house grant. Indeed, the nature of The Small House Policy has been criticized since 1995. The United Nations Committee on Economic, Social and Cultural Rights had released a report, mentioning that they were having great concerns about the sexual discrimination that the Small House Policy may potentially involve. The Equal Opportunities Commission had also noticed the case, describing that the policy was actually violating the human right ordinances applied in Hong Kong, i.e. the Hong Kong Bill of Rights Ordinance. More importantly, the policy is not only violating the rights of women but also the non-indigenous Hong Kong residents. It is argued that the principle of equal rights should be or can be applied in Hong Kong; it should protect all the citizens of Hong Kong. Therefore, it is unfair that indigenous villagers enjoy an exclusive right to build houses, especially when Hong Kong is having serious land scarcity.
Not to count that Hong Kong has one of the highest population density, such a policy is unsustainable for a small territory of 1104 sq.km. The policy is seriously against the principle of social equality, for Hong Kong does not have a distinguishable boundary between the urban and rural. Both the indigenous and the non-indigenous people have been enjoying equal rights and sharing same facilities. When the middle classes have been contributing a huge percentage of the government revenue but a big portion of it goes to housing subsidy, which the middle classes are not qualified for, growing discontent from the middle classes is inevitable.

Land supply problem and suggestion

According to Hong Kong Population Projections for 2015 to 2064, the current average annual growth rate of population is 0.8% and Hong Kong population will climb to 7.76 million in mid-2024. Planning Department also pointed out that the population of the Hong Kong Island and Kowloon in 2024 will reach 1.19 million and 2.33 million respectively while the population of the New Territories will increase by 456 600 between 2014 and 2024 and will reach 4.24 million respectively by 2024. This implies that the New Territories, containing the majority of the Hong Kong population, will experience a greater magnitude of population growth.. The significant population growth will lead to a pressing need for housing. Although the total area of Hong Kong is 1105.7 square kilometres, the land planned for residential use in 2015 is only about 77 square kilometres, accounting for 7.0% of the total area. In the face of population pressure, Hong Kong Government has to increase the land supply in order to deal with the rising housing demand in the future.
In a bid to meet the housing needs of Hong Kong citizens, Hong Kong Government has announced the new Long Term Housing Strategy in 2014. For the overall strategy, the government adopts the short, medium and long term measures to increase land supply. With respect to medium and long term measures, they focus on "review and rationalisation of brownfield sites and deserted agricultural land in the New Territories as well as mapping out further development strategy for Lantau and the New Territories North". Nonetheless, a portion of land is zoned "Village Type Development" and the land within this zone is mainly for the development of small houses by indigenous villagers. Nowadays, about 3366 hectares of land in Hong Kong are zoned "Village Type Development" on statutory plans. In 2015-16, about 26 ha of land were newly zoned "Village Type Development". In 2015, 120 cases were approved, amounting to a total area of about 2.53 ha within the 303 pending applications for New Territories Exempted Houses and Small Houses. It is the government policy that the land within "Village Type Development" will not be rezoned for large-scale development such as residential or recreational uses because of their scattered locations and infrastructural restrictions. Aside from that, Hong Kong Government also intends to concentrate village type development within this zone for the sake of "a more orderly development pattern, efficient use of land and provision of infrastructures and services".
In 2006, the former Secretary for Housing, Planning and Lands, Michael Suen Ming-yeung had tried to enlarge the magnitude of development in certain village areas by proposing the multi-storey small house developments so as to provide more residential flats given the limited supply of land for small house development. Nevertheless, the government in 2012 stated that multi-storey developments would create planning and building-control difficulties. Hence, this approach is not an ideal solution to deal with the small house development.
In this day and age, there are rising concerns about land and housing supply in Hong Kong. Most of the urban residents in Hong Kong are dissatisfied with the Small House Policy and there is a call for abolishing this anachronistic and unfair policy in Hong Kong. According to a study conducted by Civic Exchange, more than 60 percent of the respondents supported the proposition that the policy should be changed. On the other hand, the respondents tend to reform the Small House Policy to restrict small house transactions by imposing a permanent moratorium on the resale of small houses to "outsiders", i.e. non-indigenous people or allocating public housing towards villagers as a replacement for small houses or shutting down applications, but to compensate eligible villagers by other alternatives.