Research report on abuse of small house policy by selling Ding Rights

The 2015 small house development scam was just a tip of an iceberg: in December 2015,
11 NT Indigenous Villagers were sent to jail for having deceived the Lands Department in order to obtain approvals to build small houses, while what they only wanted was to sell their “ding” rights to developers who turned them into Spanish villas for profits. One could realise the pervasiveness of similar scams by visiting the many NT villages, although its illegality was repeatedly stated by the government.

The abuse must be curbed: Since 1972, the Small House Policy has caused many problems thanks to the loopholes by which the developers exploit through recruiting villagers who exercise their exclusive “ding” rights. Such practice breaches the original policy intent, not to mention the alleged illegality. However the government appears to be reluctant on reforming the policy.

Database on “Ding” house villas: Government data on the abuse of the policy is incomplete and scattered. The public, although aware of the rampant abuse, cannot state the exact nature and seriousness of the problem due to the absence of relevant data. This would not help realising policy changes. To give a head start, Liber Research Community has completed a comprehensive database on “Ding” house villas, depicting the number of suspected abuse cases. Link to Database: https://goo.gl/6DTvFn (In Chinese only)

1 in every 4 small houses abused: The research team has found at least 9 878 small houses that were built through suspected frontman scheme, through the use of a combination of map tools, paying site visits, analysing judgments of civil court cases, and performing land registry searches. These abuse cases accounts for 23% of all the 42 131 small houses approved since 1972. In other words, 1 in every 4 small houses are suspected to have been built through illegal means. Yuen Long District tops the list with the most number of abuse cases (4 495, 46%), followed by Tai Po District (1 864, 19%) and Northern District (1 205, 12%). All of the concerned small houses span across a land area of 224 hectares. [Please refer to the Digest of the facts and figures at the end of this document]

General trend: It is noted that the policy is abused systematically, in several cases the “ding” house villas concerned comprise of 100+ small houses each; in some villages, the “ding” house villas occupy the entire village, wiping out the original rural community.

Case studies: From the database, the research team selected a few abuse cases for in-depth analysis. The following five phenomena were noted:
- Systematic abuse by developers: Out of the five largest “Ding” villas, four were developed by notable developers in rural NT, which has proved that the policy is being systematically abused for profit-making;

- Lack of deterrence : The Lands Department has not played its role to effectively scrutinize small house applications to deter abuse, nor the government has followed up on the possible criminal nature revealed in the judgments of numerous civil court cases concerning small house transactions.

- Abuse is still rampant after the court case: unfortunately the 2015 court case did not curb the abuse. The research team identified multiple sites undergoing large scale construction of “ding” house villas after the alleged were found guilty.

- Violating and circumventing existing laws: some developers have abused the “party wall” arrangement by removing the wall between two adjoining small houses, turning them into a single large house for higher profits, but this may violate the Building Ordinance. Some “ding” house villa development also circumvented the control of Town Planning Ordinance on “flats” as those small houses are exempted from its scrutiny but were turned into flats after they have been built.

- Spreading of small houses to Country Park enclaves: the Government has not been screening small house demand forecasts submitted by village heads diligently and allowed the expansion of small house zones in country park enclaves, thereby permitting the abuse.

Selling small houses is not a “right”: The research team has traced the evolution of the Small House Policy since its implementation in a bid to study the loophole and how it is being exploited. It is noted that an important eligibility prerequisite was omitted upon policy adoption, making the policy no longer exclusive to “inadequately housed” villagers. This has practically made every indigenous villager, no matter he is adequately housed or not, become eligible for applying for a small house as if it is a right, thus opening it up to exploitation by those who do not need a small house. The government did not clarify the omission and regularized the transfer of small house rights few years later.

Insiders interview: The research team has beefed up the research by interviewing an insider of the small house business and a former Land Executive who was responsible for approving small house applications.

Policy recommendations: The research team makes the following policy recommendations:

○ Medium-term measures

- - With reference to a similar measure taken in 1977-1978, suspend all small house applications received from districts/villages where abuse cases have been found and established;
  - Follow up and scrutinize thoroughly the suspected abuse cases of the “ding” house villas recorded in the database,
  - Follow up and scrutinize whether the civil court cases relating to small house development indeed involve deceiving the government to obtain small house grants [Please see the list of court cases at the end of the document].

○ Short-term measures