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Transfer of development rights as an institutional innovation to address issues of property rights

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Abstract

Many densely populated cities face the issues of limited usable urban land, and the redevelopment process may threaten the built heritage. Government, in serving the public interest, often intervenes through administrative or regulatory means in the conservation of these privately owned heritage buildings during urban renewal, even though such intervention may violate private property rights to different degrees. Yet, the general law of most developed and developing countries, though in different forms, is meant to protect private property rights. So, it is important to devise a fair and workable mechanism, supported with an innovative institutional arrangement, to control development of privately owned properties. Transfer of development rights (TDR) is one institutional innovation that can balance the conflict between public and private interests to supplement the defect of planning law. Before using TDR to address the property rights issues, there are some concerns that need debating. These include: whether development rights are property rights or not; the impact of conservation on property value; and the role of TDR on property rights, compensation or mitigation of the affected property. This research study begins by analyzing the relationship between property rights and development rights, and exploring how property rights, planning law and TDR interact with each other. It then takes Hong Kong as a typical example among the dense cities to examine the TDR programmes for built heritage conservation and identify the challenges of TDR. Due to the institutional-based characteristics of TDR, the research utilizes a comparison of TDR in Hong Kong with those in other jurisdictions from the perspective of property rights to extend the research result to wider application. The most recent controversial court case in Hong Kong (the ‘Hysan’ case) is discussed to illustrate the intricacy and controversy evolving around this issue. Finally, the research proposes strategies for the improvement in TDR, based on Hong Kong and overseas experiences from the perspective of legislative amendments, protection of property rights and of other stakeholders’ rights.

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Notes

  1. Interviewee profiles.

    Interviewee

    Field of work

    Working experience

    Qualifications

    A

    Conservation

    30 or above

    Senior architectural consultant

    B

    Conservation

    30 or above

    Professor

    C

    Law

    10–15

    Lawyer

    D

    Law

    10–15

    Professor

    E

    Central and western concern group

    20–25

    Senior urban planner

    F

    Community alliance for urban planning

    20–25

    Senior urban planner

    G

    Building

    10–15

    Surveyor

    H

    Town planning

    20–25

    Urban planner/member

    I

    Building and real estate

    20–25

    Professor

    J

    Real estate company

    10–15

    Developer

    1. Source: by authors

  2. Another recent High Court case concerning height restriction of Excelsior Hotel at Causeway Bay ruled on June 2, 2017 in favor of the property owner. Although it is mainly about TPB administrative procedures, it echoes with our argument since the Hysan case, government’s encroachment on private property right could easily invite legal actions and hence increase uncertainty.

  3. King Yin Lei, built in 1936; GFA is 1641 m2 (site area is 4705 m2); Chinese palatial architecture; “Chinese Renaissance” style; designated as “monument”; Residence of two renowned figures; open to the public for visiting in designated dates but has not found the proper use in the future; the total development rights of the original heritage site are transferred to continuous site—a piece of man-made slope in 2008. The owner of the built heritage hands over the heritage site and building on it to the government. The owner can carry out development activities in the new site after paying for the land premium.

  4. Sheng Kung Hui, built in 1848; GFA 15,115 m2; Tudor Revival style; Neo-Gothic; Neo-classical with Baroque style; Residence and office of the Bishop of Victoria, owned by SKH; some new development is allowed in the original site. But in order to eliminate the new development to the heritage, transfer part of the unused development rights to the owners’ other sites located in the Clementi road, Mount Butler, in 2007.

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Acknowledgements

This paper is supported by “the Fundamental Research Funds for the Central Universities,” China, JZ2017HGBZ0966; and partially by the RGC research fund of Hong Kong Polytechnic University (Project: G-YBKY).

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Authors and Affiliations

  1. College of Architecture and Art, Hefei University of Technology, Hefei, China

    Jun Hou

  2. Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong S.A.R., China

    Edwin H. W. Chan

  3. Department of Real Estate and Construction, The University of Hong Kong, Hong Kong S.A.R., China

    L. H. Li

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  1. Jun Hou
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  2. Edwin H. W. Chan
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  3. L. H. Li
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Correspondence to Jun Hou.

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Hou, J., Chan, E.H.W. & Li, L.H. Transfer of development rights as an institutional innovation to address issues of property rights. J Hous and the Built Environ 33, 465–479 (2018). https://doi.org/10.1007/s10901-018-9613-6

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