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Restrictions on non-industrial use in industrial buildings – Hong Kong

Following is a question by the Hon Ma Fung-kwok and a written reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (November 11)

Question:

It has been reported that the Lands Department (LandsD) has recently taken vigorous enforcement actions against cases of industrial building units being used for purposes in breach of the uses prescribed in the land lease provisions (the breaching cases), and has even proceeded to re-enter some of those units.  Some art groups currently renting industrial building units have relayed to me that they have received warning letters from LandsD for breaching the uses prescribed in the land lease provisions, and therefore are very worried that they will eventually be required to move out of the units. In this connection, will the Government inform this Council:

(1) of the number of warning letters issued by LandsD in respect of the breaching cases last year, with a breakdown by the breach together with their percentages in the total number of such letters;

(2) of the number of cases last year in which LandsD registered the warning letters issued in respect of the breaching cases at the Land Registry (commonly known as “imposing an encumbrance”), and the number of cases in which LandsD proceeded to re-enter such units, with a breakdown by the breach;

(3) given that currently owners of industrial building units may apply to LandsD for a temporary waiver concerning changes in the use of such units, of the number of such applications received by LandsD in each of the past three years, with a breakdown by the proposed use; among these applications, of the respective numbers of cases approved and rejected by LandsD, as well as the reasons for rejection;

(4) given that as revealed by the 2014 Area Assessment of Industrial Land in the Territory published by the Planning Department in August this year, more and more economic activities and emerging industries are opting for floor space in industrial buildings, examples of which include data centres, cultural/creative art studios, etc., and those activities and industries, which are classified as “Other Uses”, currently occupy about 5.1 per cent of industrial floor space and there is an upward trend in that percentage, how the authorities, in enforcing the land lease provisions in relation to industrial buildings, will at the same time have regard to promoting economic activities and developing emerging industries, so that the latter can survive in industrial buildings; and

(5) given that the Secretary for Development mentioned in his blog in August this year that the authorities would conduct a study to explore, on the premise of satisfying all fire and building safety requirements, further relaxation of the restrictions on non-industrial uses in industrial buildings, of the details of the relevant study (including the timetable for commencing the study); in the course of the study, how the authorities will take on board the views from different stakeholders (including the local art and cultural sector, the sports sector, etc.), so as to enable them to use industrial building units in a sensible, reasonable and lawful manner?

Reply:

President,

Land leases are private contracts between the Government and the landowners. The landowners are required to ensure that the uses of land are in compliance with the lease conditions. Whether a particular use is in breach of the lease conditions cannot be generalised as it depends on the actual operation of the particular use and the relevant lease conditions of the lot. At present, the lease of most industrial buildings specifies that the lot shall not be used for purposes other than “industrial and/or godown”. Under such circumstances, if an industrial building is used for other purposes, it may be in breach of lease conditions unless the owner has applied and obtained approval from the Lands Department (LandsD) for a waiver or change of the user clause, and obtained the relevant planning permission in advance where applicable.

In general, if a breach of lease conditions is confirmed, LandsD will take appropriate lease enforcement actions, including issuing a warning letter to the owners requiring them to rectify the breach. If the breach is not rectified within a specified period, LandsD will register the warning letter at the Land Registry, commonly known as “imposing an encumbrance” and, where necessary, take further lease enforcement actions including re-entering the land or vesting the interests of the property in the Government.

LandsD adopts the same criteria in handling cases of breach of lease conditions in industrial buildings, and has the responsibility to follow up on such cases. When handling situations involving lease breaches, LandsD allows a certain degree of flexibility where practicable, for example, warning letters are issued in advance and grace periods are allowed before imposing an encumbrance. The more stringent measure of vesting will only be resorted to where necessary. However, if it is found that the use in question not only breaches the lease conditions, but also poses greater safety risks, such as cases involving a higher flow of people (particularly elderly persons and children) in the concerned industrial building, it is necessary for LandsD to step up enforcement actions, including requiring the owner to rectify the breach within a short period of time. If the owner fails to do so, LandsD will take prompt and decisive action, including re-entry or vesting.

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