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Explainer: Hong Kong’s divisive Small House Policy

The so-called ‘Small House Policy’, whereby indigenous villagers in the New Territories are allowed to build a house, is rarely far from the news, whether it takes the form of villagers championing their rights, or calls from others in Hong Kong to abolish what is seen by many as anachronistic and unfair.

On December 24 last year, the powerful Heung Yee Kuk, the statutory body made up of representatives of the Rural Committees in the New Territories, posted a full-page advertisement in local newspapers saying that the transfer of the rights to build small houses by villagers should not be criminalised.

It was responding to several court cases related to the Small House Policy, including the conviction of 11 indigenous villagers from Sha Tin for illegally transferring their land rights to developers, and a High Court ruling that indigenous villagers were just as guilty as developers in an illegal land rights sale. The Kuk promised to help the 11 indigenous villagers.

In the ad, the Kuk denied that criminal fraud was involved in the cases, and said it would continue to negotiate with the government to solve the problem, or it may take the issue to court, or seek an interpretation of the Basic Law by the Standing Committee of the National People’s Congress.

A small house village in New Territories.

A small house village in New Territories. Photo: Apple Daily.

What is the Small House Policy?

Under the Small House Policy, any male indigenous villager who is descended through the male line from someone who was a resident in 1898 of a recognised village in the New Territories may apply to build a small house –  a maximum of three storeys in height and 700 square feet in each floor – on their own land at zero premium, or on public land through a private treaty grant, once during his lifetime.

This right is non-transferable, and it is a criminal offence to sell the right.

The policy was introduced in December 1972 as the government wanted to gain support from indigenous villagers for development in the New Territories.

The Heung Yee Kuk has repeatedly said that these rights were “constitutionally protected”. Article 40 of the Basic Law states that “The lawful traditional rights and interests of the indigenous inhabitants of the ‘New Territories’ shall be protected by the Hong Kong Special Administrative Region.”

Lau Wong-fat (left) - father - and Lau Ip-keung (right) - son - former and current Heung Yee Kuk chairmen.

Lau Wong-fat (left) – father – and Lau Ip-keung (right) – son – former and current Heung Yee Kuk chairmen. File Photo: Apple Daily.

What is the Heung Yee Kuk?

The Heung Yee Kuk – sometimes called the Kuk – was founded in 1926 to represent the interests of indigenous villagers.

It is made up of the 27 Rural Committees in Tuen Mun, Yuen Long, Sha Tin, Tai Po, North, Sai Kung, Kwai Tsing, Tsuen Wan and Islands districts. The chairman of each of the Rural Committees automatically becomes an ex officio member of the relevant district council.

The Kuk can pick a candidate as the lawmaker for the Heung Yee Kuk functional constituency of the Legislative Council, formerly called the Rural functional constituency.

Rural elections have some features which would be illegal elsewhere. Suggestions that it should be a criminal offence to entertain electors were opposed by the Kuk on the grounds that “treating” was an integral part of the electoral process. One Kuk member caused a minor controversy by offering to pay for dinner for his fellow-members if  former Kuk chairman Lau Wong-fat was re-elected.

A small house. File Photo: Apple Daily

A small house. File Photo: Apple Daily

What is the problem with the policy?

Land supply in the New Territories is not unlimited. Former Secretary for Housing, Planning and Lands Michael Suen Ming-yeung has said that it is impossible to satisfy indigenous villagers’ demand for small houses indefinitely.

Many male indigenous villagers, even though they have the right, do not own any piece of land. Land supply for small houses is said to be controlled by a small number of indigenous villagers.

According to a study on the Small House Policy by the think tank Civic Exchange in May last year, it “conservatively” estimated that there may be 85,600 to 91,700 outstanding small house claims, of which 10,000 of which have already been filed. These claims would require another 11-12 square kilometres of land to fulfill – around the size of 277 Victoria Parks.

Also, the cost of building small houses has been rising. As there is a scarcity, those who own land may decide not to build small houses for themselves, but work with developers by selling the right to build them. In other words, to turn the small houses into a property project – such as a small housing estate – for profit.

Another issue was that small houses are legally limited to three storeys, but local media have often found illegal structures in some small houses, in some cases making them up to seven storeys in height.

The Heung Yee Kuk advertisement in newspapers on December 24, 2015.

The Heung Yee Kuk advertisement in newspapers on December 24, 2015.

Has the government tried to change the Small House Policy?

The advertisement said that the government had modified the policy in October 1997 following a court case, to say that new applicants of small houses must make a statutory declaration to confirm that they were not selling their rights or to make similar arrangements.

It added that after negotiations with the government, the then-Secretary for Development Carrie Lam Cheng Yuet-Ngor wrote to the Heung Yee Kuk in 2007 saying that villagers suspected of transferring their rights will not face criminal prosecution.

The Kuk had viewed the 2007 letter as reassurance from the government that villagers would only face civil lawsuits.

A character in the movie Overheard 3 (left) and "Shanghai Boy" Kwok Wing-hung (right).

A character in the movie Overheard 3 (left) and “Shanghai Boy” Kwok Wing-hung (right). File Photo: Apple Daily.

What is the public’s perception?

Urban politicians have complained that the policy is sexist and unfair to urban residents who have so such rights.

According to the Civic Exchange study, around 70 percent of the general public were concerned about villagers profiting from their land grants by selling to outsiders and that the policy is discriminatory and unfair to non-indigenous persons.

Over 80 percent of the general public considered the lack of comprehensive planning, the absence of any action to review the policy, and different enforcement approaches to illegal works between small houses and buildings in urban areas “very” or “somewhat” important.

More than 60 percent of those interviewed, after considering the issue, supported the proposition that the policy should be changed.

A local crime thriller, Overheard 3, came out in 2014, satirising the Small House Policy. The movie tells the story of a housing estate development project after small house applications were no longer accepted by the government, and the struggle between landowners, the leader of the indigenous villagers and his subordinates over the project.

Some of the characters in the movie were said to be inspired by famous indigenous villagers and actual people related to the small house business, including the alleged former triad boss “Shanghai Boy” Kwok Wing-hung.

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Explainer: Hong Kong's divisive Small House Policy