The Development Bureau had launched a pilot scheme for charging land premiums at standard rates for lease modifications for the redevelopment of industrial buildings (IBs) on March 15. The scheme is applicable to IBs constructed before 1987 to provide IB owners with an alternative to the conventional mechanism for premium assessment.
Under this pilot scheme, standard rates are set for five broad regions in Hong Kong and three types of uses involved in lease modifications for IBs (namely "industrial/godown" use before redevelopment, as well as "commercial/modern industrial" use and "residential" use after redevelopment).
The aforementioned standard rates will remain unchanged for the two‑year period of the pilot scheme. During the period, IB owners may compute the land premiums payable based on the uses and gross floor areas (GFAs) before and after lease modification by applying the promulgated standard rates, to consider whether to apply for lease modification for the redevelopment of IBs.
The Lands Department issued a Practice Note on March 15 for industry reference on the operational details of the pilot scheme, including how lease modification applicants may exercise the right to opt for calculating land premiums by standard rates, the transitional arrangement applicable to lease modification cases under processing, and the calculation of GFA. The pilot scheme will run for two years from the date of promulgation of the Practice Note, i.e. from 15 March 2021 to 14 March 2023.
The Standard Rates Applicable to the Pilot Scheme with computation examples
Relevant Practice Note of Lands Department 1/2021