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Small House Policy in Hong Kong

Updated: Dec 4, 2020

Written by: Valerie Fan

The Small House Policy (“SHP”) aims to provide indigenous male villagers in the New Territories with the right to build houses on their own piece of land. Such rights are called “ding rights” in Chinese. It is also held to be protected under Article 40 of the Basic Law in a recent lawsuit (which will be discussed later in detail). [1] It stipulates “The lawful traditional rights and interests of the indigenous inhabitants of the ‘New Territories’ shall be protected by the Hong Kong Special Administrative Region.” Details of the policy have been altered over time, which includes adding restrictions on the structure of the building. Nevertheless, with the growing housing demand and scarcity of land due to geographical constraint, it raises concerns whether such policy is still sustainable and whether the law that protects such interest should be challenged. Some indigenous villagers even sold their “ding rights” to non-indigenous villagers in order to gain profit illegally, which sparked off further controversy. This essay aims to examine the background of initiating this policy, whether the original aim still applies to the current societal context and evaluate the competing interests between preserving traditional rights of the indigenous villagers and alleviating housing shortage.

Background of the law

The SHP was introduced in 1972 as the British colonial government wanted to improve the housing standards in the rural areas of the New Territories. According to a report made by Civic Exchange, there were different improvements made, for example basic drainage and sewage disposal facilities were built, modern houses replaced “temporary” structures and over 28,000 small houses were constructed. [2]Residential and sanitary conditions were greatly enhanced.

In fact, since the Qing dynasty, indigenous male villagers in the New Territories have been building houses on their own land. The formal introduction of the SHP was the British colonial government’s way of paying respect to the tradition when China ceded the New Territories to Britain in 1898 after the Second Opium War under the New Territories Lease.

As aforementioned, Article 40 indeed protects ding rights, yet housing shortage raises the concern of whether such law should be challenged. To examine this, we have to consider how the original aim of the law positions itself in the current societal context and the balance between preserving traditional rights and solving the problem of insufficient housing supply.

Disposal of small houses in a short time

The SHP aims to provide more hygienic accommodation to indigenous villagers, yet recent figures show that small houses are disposed quickly after the certificate of compliance has been issued. Under the SHP, villagers can only sell their house after the certificate of compliance is issued and they need to apply for removing the alienation restriction. However, according to the government press release, on average 50.6% of houses with certificates issued were disposed from 2008 to 2017.[3] Moreover, back in 1987, 19 of the 35 small houses constructed under the Tin Sum Village project requested disposal just after the certificates are allotted for the purpose of selling them in the market. It suggests that the original aim to offer better quality housing for indigenous villagers seems not applicable now and perhaps only a tool to gain profit by selling these houses.

Selling ding rights

Selling small houses after the certificate of compliance have been issued and the application of removing the alienation restriction have been approved are lawful but selling ding rights is a separate matter. In particular, a 2015 case on illegal selling of ding rights caught citywide attention.[4] The situation is that villagers have ding rights but they do not have land to build a house and the property developer has land but does not have ding rights. Therefore, the developer sold the land to the villagers to build houses with a secret agreement to transfer the ding rights to him so that the houses would be under his name and the villagers would be able to gain a considerable sum of money. It reflects that such selling of ding rights is meticulously planned, with structured organization between the property developer and multiple villagers to undergo illegal transaction.

Despite ruling the selling of ding rights as illegal, according to a research done by Liber Research Community, there are 23% of the houses that are suspected of being involved in the selling of ding rights.[5] The Community identified several characteristics of these illegal ding houses. Firstly, there are walls that surround these houses. On top of that, the houses are constructed with a similar architectural style. In addition, they are given an estate name.The Lands Department is aware of the Community’s report but with the lack of substantial evidence of property developers and villagers’ use of false instrument and declaration, it is hard for the Lands Department to take legal actions.

With the increasing number of suspected and established cases of selling ding rights that involve property developers colluding with villagers to gain profit through illegal means, it is questionable whether such law to protect the indigenous villagers’ right to build ding houses should continue to exist.

Policy as an interim measure

Article 40 of the Basic Law protects the rights of villagers to build houses on their own land, which is enabled by the Small House Policy. However, it should be noted that the objective of the policy is only an “interim measure” as mentioned by the then district commissioner of the New Territories Dennis Bray. In the speech that he made as recorded in the Memorandum for Executive Council tilted “Policy with regard to small houses in rural areas of the New Territories”, SHP does not intend to protect traditional rights or interests of the villagers and it was only used to improve the housing conditions in the New Territories.[6] As such, since the housing conditions of the villagers have already been improved, whether such law should still be in force to protect their rights is in doubt. As such, the law’s original purpose to protect the execution of SHP no longer fits the current societal context.

Balance between preserving traditional rights and alleviating housing shortage

Despite all the controversy related to the sustainability of the Small House Policy as protected by Article 40 of the Basic Law, a recent judicial review held that the villagers’ right to build houses on their own land is traditional and legal.[7] The appellants raised arguments such as that the policy (as protected by the law) discriminates non-indigenous Hong Kong citizens, female indigenous villagers and the Government did not fulfill its responsibility to “manage, use or develop land in Hong Kong for the benefit of all Hong Kong residents” and hence unconstitutional. However, the court decided so long as the rights or interests have “traceable” essential feature(s) enjoyed by villagers before the commencement of the New Territories Lease, it would be a traditional and lawful right. Aforementioned, such customs existed in the New Territories for a long time, villagers did not need to seek approval from the imperial authorities or subsoil land owner to build houses. Since a custom that could be traceable is considered traditional and lawful, such right should not be challenged on the ground of discrimination , or other grounds of unlawfulness.

Male villagers’ right to build houses on their own land have been proved to be a traditional right evidenced by history. Indeed, the New Territories has been famed for its rural villages. Unlike urban areas, these small houses help to preserve the “physical fabric” of the New Territories villages.[8] The usual custom of living by clans could also be preserved by building villagers’ houses close to one another. Therefore, Article 40 could strengthen the community bond between indigenous villagers as facilitated by the SHP to build houses on their own land as their traditional interest.

Nevertheless, the pressing social problem of housing shortage puts the upholding of the law to protect the villagers’ traditional interest into question. According to the government statistics, Hong Kong citizens need to wait for 5.5 years on average for public housing. Hong Kong remains the least affordable housing market for the tenth consecutive year in 2020 as reported by the South China Morning Post.[9] With soaring housing price and long waiting time for public housing, it is not difficult to imagine the hardships faced by those who are unable to own a property. However, according to government statistics, 932 hectares of unleased or unallocated land were reserved for “Village type development” and 391.5 hectares of unleased or unallocated for “residential” or “commercial/residential” uses. Although the government claims that these land might not be immediately available for development and they might not be suitable for large-scale development due to their sporadic locations, it reflects the government’s disproportioned allocation of land between ding houses and common residential buildings.

It is true that New Territories indigenous villagers need a shelter for accommodation, but the structure could be scaled down. Currently, ding houses have a maximum of three stories, height of 8.3 metres and 700 square feet for the roofed-over area.[10] A lot of small houses are even packaged into luxurious residential houses with examples of Hillwood and The Wonderland. Facing the long-term, serious problem of housing shortage, the government should have similar housing structures between small houses and other residential houses which can stop property developers from buying the villagers’ ding rights illegally as a method of developing luxurious residential projects for sale. In a way, building such extravagant houses for indigenous villagers is already going against the original aim of SHP to provide more sanitary accommodation.


The SHP successfully enhanced the living conditions of the New Territories indigenous villagers and preserved the traditional rights of the villagers. Unfortunately, some villagers abused the system and colluded with property developers to gain profit illegally by selling their ding rights. In light of the serious problem of housing shortage, it can be concluded that the land allocation between ding houses and other residential housing is disproportionate. The extravagance of some current ding houses as constructed by the property developers further suggests the current SHP has diverged from the original purpose of the policy which is to provide more hygienic accommodation for the villagers.

Certainly, balancing between preserving traditional right and mitigating housing shortage is difficult. The government should first investigate into the problem of small houses in Hong Kong, followed by providing a solution to the problem so as to protect the interests of the relevant stakeholders.

Disclaimer: The opinions expressed in this post are those of the authors, and do not reflect the views or opinions of the Durham Asian Law Journal.

[1] Kwok Cheuk Kin & Lui Chi Hang, Hendrick v Director of Lands & Secretary for Justice [2019] HKCFI 867 [2] Civic Exchange, Rethinking the Small House Policy (Civic Exchange, 2003) page 13 [3] Tiffany Ng, Legislative Council Research Publications, 28 January 2016 <> accessed 3 July 2020 [4] HKSAR v Li Yam-pui David [2015] DCCC 25/2015 [5] Liber Research Community, Research report on abuse of small house policy by selling Ding Rights (Liber Research Community, 2018) page 13 [6] Tiffany Ng, Legislative Council Research Publications, 28 January 2016 <> accessed 3 July 2020 [7] Kwok Cheuk Kin & Lui Chi Hang, Hendrick v Director of Lands & Secretary for Justice [2019] HKCFI 867 [8] Liber Research Community, Research report on abuse of small house policy by selling Ding Rights (Liber Research Community, 2018) page 13 [9] Cheryl Arcibal, ‘Hong Kong tops global list of most expensive housing market again as protests make little dent’ (Hong Kong, 20 January 2020) 1 [10] Land Department, How to Apply for a Small House Grant (2014) Section II(g)

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