The Extension of Government Leases Bill would take effect via government gazette notices on Friday, allowing commercial, residential and industrial land leases to be automatically extended for another 50 years upon expiry on June 30, 2047.

According to the policy statement promulgated by the Hong Kong Special Administrative Region (HKSAR) Government in July 1997, leases not containing a right of renewal (excluding special purpose leases) may, upon expiry and at the sole discretion of the HKSAR Government, be extended for a term of 50 years without payment of an additional premium. Nevertheless, the extended leases are subject to a payment of an annual rent at 3% ratable value of the property at that date, the annual rent will be adjusted in step with any changes in the ratable value thereafter.  For further details, please visit the LandsD's website (www.landsd.gov.hk/en/service/landpolicy.htm).

Since the establishment of the HKSAR, the LandsD has been dealing with matters related to the extension of leases after 1997 in accordance with the aforementioned policy. Leases extended in original terms and conditions have been extended without payment of additional premium but subject to payment of an annual rent. Various factors will be considered on lease extension, including whether the land is required for a public purpose upon expiry, or whether serious lease breaches are found.

More than 300,000 commercial, residential and industrial land parcels will be automatically extended for another 50 years upon expiration

The automatic renewal is designed to simplify current procedures and provide stability, enhancing Hong Kong’s appeal as a hub for long-term investments.  According to the new law, landlords will not face any land premium payments but will incur an annual rent set at 3% of the land’s rateable value.

The bill facilitates the renewal process through government gazette notices, eliminating the need for individual negotiations and allowing for collective extensions announced six years before lease expirations. This streamlined approach, coupled with a provision for lease extension without owner intervention unless opted out, is expected to maintain high levels of property owner participation and investor confidence.

Secretary for Development Bernadette LINN Hon-ho told media that the new renewal mechanism would help maintain property owners and investors’ confidence.  She said the first batch of leases to be automatically renewed would expire in 2031, and gazette notices of renewal of these leases would be put up at the end of December this year.

Authorities will also inform the public through both Chinese- & English-language newspapers. Renewals will also be published on the website of the Lands Department.

Hong Kong properties owned by foreign entities will require prior written approval for lease extension from the Office of the Commissioner of China’s Ministry of Foreign Affairs in Hong Kong.