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Lease Extension

The Government of the Hong Kong Special Administrative Region (HKSAR) has a clear and unequivocal policy for handling matters related to the extension of expiring land leases.  In July 1997, the HKSAR Government promulgated the land policy, which states that leases not containing a right of renewal (excluding short term tenancies (STTs) and special purpose leases (SPLs)), may, upon expiry, be extended at the sole discretion of the Government for a term of 50 years without payment of any additional premium, but an annual government rent equivalent to three per cent of the prevailing rateable value of the property at the time of assessment of government rent shall be charged.  Matters related to the extension of STTs and SPLs upon expiry are to be handled according to the established policies.

To streamline the procedures for extending leases not containing a right of renewal (excluding STTs and SPLs), the Extension of Government Leases Ordinance (the Ordinance) has come into operation since 5 July 2024 to provide a new statutory mechanism for extension of leases.  The Lands Department will publish Extension Notices in the Government Gazette regularly 6 years before expiry of the relevant leases to specify whether the leases will be extended.  This saves the owners from the cumbersome and costly procedures of executing extension documents with the Government individually, making lease extension much easier.

 

Introduction

The Extension of Government Leases Ordinance (Cap. 648) (the Ordinance) has come into operation since 5 July 2024.  The Ordinance only streamlines the means of lease extension, and does not change the prevailing policy on lease extension. According to the land policy which was promulgated in July 1997 and remains in force, the Government has the sole discretion to decide whether to extend a lease.

Scope of application of the Ordinance

The new extension mechanism under the Ordinance applies to leases expiring on or after 5 July 2024 without a right of renewal (applicable leases) which are neither short term tenancies (STTs) nor special purpose leases (SPLs).  In other words, leases for general commercial, residential or industrial uses are covered under the Ordinance.

The Lands Department will continue to process matters related to the extension of STTs and SPLs  through contractual means outside the Ordinance.  For STTs, please refer to the "Short Term Tenancy" section of this website.  For SPLs, please refer to the relevant part of this section.

Mechanism for lease extension

The Lands Department will publish the "Extension Notice" in the Government Gazette normally 6 years before the expiry of applicable leases.  The "Extension Notice" will specify that all applicable leases that are due to expire in the specified lease expiry period will be extended in accordance with the Ordinance, except those specified on the "Non-extension List" published on the same day.

The first "Extension Notice" was published in the Gazette on 5 July 2024, covering the lease expiry period from 5 July 2024 to 31 December 2030.  Thereafter, the Lands Department will publish a set of "Extension Notice" and "Non-extension List" in the Gazette published at the end of each year (as illustrated in the schedule below), and will upload them to this website.

Schedule:

Publication date in the Gazette Specified lease expiry period being covered
5 July 2024 5 July 2024 to 31 December 2030
End-December 2024 1 January to 31 December 2031
End-December 2025 1 January to 31 December 2032
End-December 2026 1 January to 31 December 2033
End-December 2027 1 January to 31 December 2034
(and so on)

Terms of Extension

Under the Ordinance, applicable leases covered by the "Extension Notices" will be extended for a term of 50 years from the day following the expiry date of the lease.  Owners are not required to pay additional premium for the lease extension, but, upon extension, they are required to pay an annual government rent equivalent to three per cent of the rateable value of the property as annually assessed.  The original lease conditions remain unchanged, but standard clauses will be included to strengthen the control against unauthorised uses or developments.

Encumbrances, interests and rights carried forward

As specified in the Ordinance, all encumbrances, interests and rights under the original applicable lease as applied immediately before lease extension, such as mortgages, Owners’ Corporation and Deed of Mutual Covenant, etc., will be carried forward (unless the relevant instrument specifies alternative arrangements).

How to ascertain if a lease has been extended under the Ordinance

According to the streamlined mechanism under the Ordinance, applicable leases extended will not be individually listed in the "Extension Notice" . Only applicable leases which are not extended will be specified individually on the "Non-extension List" . 

If a lease fulfills all the circumstances below, that is –

  1. the "Extension Notice" covering the expiry date of the lease has been published (which can be accessed on this website);
  2. the lease has no valid "SPL identification note" in its register at the Land Registry (meaning that the lease is an applicable lease under the Ordinance); and
  3. the lease is not specified in the "Non-extension List" published on the same day (which can also be accessed on this website);

then the lease is confirmed extended according to the Ordinance.

It is uncommon that an applicable lease is not extended.  If such situation happens, the Lands Department will take the following additional measures to notify the owners: issue letter to notify individual owners, register the "Non-extension List" in the Land Registry register of the lease and affix the "Non-extension list" in a conspicuous position on or near the land.

Contractual rights under the streamlined mechanism – Option by lessee for non-extension of lease

The Ordinance aims to extend leases in a more streamlined and efficient manner without affecting the intention of the parties to opt out from lease extension.

If the applicable lease is extended by the "Extension Notice" , but the owner wishes to opt out from lease extension, he can complete the "Opt-out Memorandum" in prescribed form (the specified form can be obtained on this website) and deliver it to the Land Registry for registration within one year from the date of publication of the "Extension Notice" under section 9 of the Ordinance.  If the lease is covered by the first "Extension Notice" published in the Gazette on 5 July 2024, that is, leases expiring on or before 31 December 2030, the deadline for opting out is 31 December 2024.

Before making the decision, owners are reminded to ensure that their decision to opt out will not prejudice any other contractual commitments they have entered into with third parties.  Those involved in land and property transactions should also note that owners of applicable leases have the right to opt out from lease extension, and they should take appropriate measures to protect their own rights and interests. 

On the other hand, the Government has the sole discretion to decide whether to extend a lease in accordance with the land policy which was promulgated in July 1997 and remains in force.  The Government will normally extend applicable leases unless in a remote scenario where there are public interest considerations against the extension of any particular lease (meaning that the lease is specified in a "Non-extension List" ).  If the owner does not agree with the decision, he may apply to the Lands Department for a review within one year of the publication of the Non-extension List.  For details, please refer to the guidelines on this website.

Resources
‐  Leaflet Download icon
‐  Frequently Asked Questions

"Extension Notices" and "Non-extension Lists"
‐ Government Notice published under the Ordinance
(covering the applicable leases expiring from 5 July 2024 to 31 December 2030)

Forms and Guidelines
‐ Specified Form under Section 9(2) of the Ordinance ( "Opt-out Memorandum" ) Download icon
‐ Guidelines on Applying for review of the Government's decision of non-extension of a lease

 

On 15 July 1997, the Chief Executive in Council endorsed various matters concerning land leases and related matters of the HKSAR Government.

For general land grant policy endorsed by the Chief Executive in Council, please refer to Land Tenure System and Land Policy in Hong Kong.

The Government has a clear policy for handling leases and related matters, including the extension of leases. The policy is premised on the basic guiding principles of continuity in the arrangements, simplicity in procedures and certainty in the tenure of leases.  It seeks to provide clarity, consistency and certainty in the land lease terms.

Article 123 of the Basic Law provides that where leases of land without a right of renewal expire after the establishment of the HKSAR, they shall be dealt with in accordance with laws and policies formulated by the HKSAR on its own.  Accordingly, the HKSAR Government promulgated the policy stating that leases (excluding short term tenancies and special purpose leases) not containing a right of renewal may, upon expiry and at the sole discretion of the HKSAR Government, be extended for a term of 50 years without payment of any additional premium, but an annual government rent shall be charged from the date of extension equivalent to 3% of the rateable value of the property at that date, adjusted in step with any changes in the rateable value thereafter.

The policy applies to all leases not containing a right of renewal (excluding short term tenancies and special purpose leases), and does not set any limit on the number of times that a lease can be extended. For the avoidance of doubt, the policy also applies to renewable leases which have already been renewed pursuant to the right of renewal contained in the lease with no further right of renewal upon expiry of the renewal term.

Since the establishment of the HKSAR, the Lands Department has been handling matters related to the extension of expiring leases in accordance with the land policy which was promulgated in July 1997 and remains in force.  The Government follows due process and acts reasonably in exercising its sole discretion. In general, leases for general commercial, residential or industrial uses will be extended, unless there are public interest considerations against the extension of a particular lease (such as serious lease breach that remains unpurged despite repeated warnings). For leases for general commercial, residential or industrial uses, the fact that the land is required for a public purpose after expiry of the lease is not a public interest consideration for not extending the lease (if the land is required for a public purpose, the Government would resume the land and compensate the owners in accordance with the relevant legislation, instead of taking back the land by not extending the lease and without paying compensation). As a matter of fact, the Lands Department has extended all non-renewable leases for general commercial, residential or industrial uses since the land policy was promulgated in July 1997.

 

Special Purpose Leases (SPLs) refer to leases granted, disposed of or modified on specific policy considerations for designated uses.  Major categories of SPLs include educational, public utilities (including public transport), welfare, religious, special industries, petrol filling stations and recreational uses, etc.

The Ordinance is not applicable to SPLs, the extension of which will continue to be processed by the Lands Department through contractual means outside the Ordinance.  Specifically, the Lands Department will consult the relevant policy bureau(x) before expiry of the lease on whether the lease should be extended and the terms of the extension.  The relevant policy bureau(x) will assess each case from the policy angle and consider relevant factors (e.g. whether the original policy consideration of granting the SPL remains valid).  If lease extension is approved with the policy support of the relevant policy bureau(x), the Lands Department (representing the Government as landlord) will execute a new land lease with the lessee upon mutual agreement of the terms and conditions.

For the purpose of identifying SPLs to be excluded from the new extension mechanism under the Ordinance, the Lands Department will cause to make the SPL identification note in the relevant Register of each SPL in the Land Registry based on the following timetable specified under the Ordinance, and will notify the lessees of the SPLs by letters:

Type of SPLs Identification date

Leases executed before 5 July 2024:

- Leases expiring from 5 July 2024 to 31 December 2030 (both days inclusive)

 5 July 2024

- Leases expiring in or after 2031

27 December 2024

Leases executed on or after 5 July 2024:

Date on which the entry relating to the lease is made in the Register
Leases modified as an SPL on or after 5 July 2024: Date of registration of the modification instrument

If the lessee does not agree with the identification of the lease as an SPL, he may submit a review application to the Lands Department within one year from the date of identification.  For details, please refer to the guidelines on this website.

Resources
‐      Frequently Asked Questions
‐      Guidelines on Applying for review of the Government's identification of a lease as a Special Purpose Lease

Lists of SPLs
‐    List of SPLs published on 5 July 2024 (Last Modified: 5.7.2024) Download icon

 
  • 2024 (Last Modified : 14.6.2024)
  • 2023 (Last Modified : 15.3.2024)
  • 2022 (Last Modified : 21.12.2022)
  • 2021 (Last Modified : 15.2.2022)
  • 2020 (Last Modified : 11.2.2021)
  • 2018 (Last Modified : 14.12.2018)
  • 2017 (Last Modified : 4.7.2018)
  • 2016 (Last Modified : 15.2.2017)
 
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