The Small House Policy (SHP, ) was introduced in 1972 in Hong Kong. The objective was to improve the then prevailing low standard of housing in the rural areas of the New Territories. The policy allows an indigenous male villager who is 18 years old, and who is descended through the male line from a resident in 1898 of a village in the New Territories, an entitlement to one concessionary grant during his lifetime to build one house.Background brief on processing of small house applications and review of small house policy
The policy has generated debates and calls for amendments to be made.
History
The Small House Policy has been in effect ever since 1972 to provide a once-in-a-lifetime small house grant for an indigenous villager who is "a male person at least 18 years old and is descended through the male line from a resident of 1898 of a village (Ding, ) which is approved by the Director of Lands". An indigenous villager therefore enjoys small house concessionary rights (ding rights, ) in building a house of not more than three storeys nor more than 700 square feet per floor (therefore a maximum of 195 square meters, or 2,100 square feet), through a Private Treaty Grant, a Building Licence or an Exchange issued under this policy. These rights were further incorporated into the constitutional framework. It was stipulated in Article 40 of the Basic Law – "The lawful traditional rights and interests of the indigenous inhabitants of the 'New Territories' shall be protected by the Hong Kong Special Administrative Region", making significant amendments to this policy difficult. By 2016, there were approximately 240,000 small house concessionary rights holders in Hong Kong.
The Small House Policy is a legacy of the British colonial government. In order to cater for the needs of an increasing demand for housing and to prevent recurrence of anything similar to the 1967 Hong Kong riots, the outbreak of which was partly due to people's discontent towards the indifferent attitude of the colonial government toward public welfare, threatening the colonial rule, the colonial government was keen on improving the living conditions of Hong Kong dwellers in the 1970s. One of their plans was to develop new towns () in the New Territories, which were later known as Tsuen Wan New Town, Sha Tin New Town, Tuen Mun New Town and so on. As this would require a large-scale confiscation of land and demolition of housing, David Akers-Jones, the then Secretary for the New Territories, implemented the Small House Policy in exchange for the New Territories indigenous groups' support for the new town development. Meanwhile, the government also added some constraints in this policy by including a Restriction on Alienation which required indigenous villagers to pay a premium if they wish to transfer their rights of ownership to non-indigenous villagers within a five-year period.
In 2012, Carrie Lam called for an end to the Small House Policy. In 2015, a developer and 11 villagers in Sha Tin were sentenced to jail for up to three years over the illegal sale of their small houses. The developer secretly made an agreement with the 11 villagers to buy their ding rights; in 2025, the court ruled that the villagers' lawyers were incompetent and overruled the original sentence.
In December 2018, Martin Lee represented Kwok Cheuk-kin and Hendrick Lui Chi-hang in an attempt to repeal the policy. Lee argued that the policy discriminates based on gender and descent, and that the policy was implemented by the British in 1972, and could not have been part of "indigenous" rights that villagers claim to have had in 1898.
In April 2019, the Court of First Instance ruled that two of the three methods for obtaining a small house grant (private treaty grants and exchanges) would become banned. The third method, the free building license, would continue to be legal. The Heung Yee Kuk organization supported the existing Small House Policy, and threatened to ask Beijing for help if an appeal to the April 2019 ruling was not granted. It spent HKD $30M on the first round of judicial review.
As of October 2020, approximately 43,000 small houses had been built in Hong Kong under the policy.
In January 2021, the Court of Appeal ruled against the April 2019 ruling, and said that all three methods for obtaining a small house grant were legal, making private treaty grants and exchanges legal once again. The plaintiffs, Hendrick Lui Chi-hang and Kwok Cheuk-kin, said that they would take the case to the Court of Final Appeal. Justice Jeremy Poon also claimed that Hendrick Lui Chi-hang and Kwok Cheuk-kin did not have sufficient standing to bring up the case because they do not own land rights in the New Territories. In response, a member of the Liber Research Community said that "The ding right affects every Hong Kong citizen as it competes with other land uses for land resources. The government has had to reserve lots of space in new towns for villagers to build their homes, while the land could have been better used for higher-density developments. How can the court say we have no stake in the issue?" Additionally, the Liber Research Community said that due to the reversal of the April 2019 decision, 900 hectares of government land that could have been used for high rise developments would again be re-allocated to villagers and small houses.
Following the decision by the Court of Appeal, the SCMP Editorial Board wrote that the Small House Policy is an unsustainable burden and also unfair and discriminatory. Other SCMP opinion writers, such as Cliff Buddle and Mike Rowse, also criticized the Small House Policy, stating that "The scheme is open to abuse with many recipients no longer living in their New Territories village" and that "Everyone in the administration has known for decades that the policy is impractical and unprincipled."
In March 2021, Apple Daily reported that Woo Kwok-hing's sister, Woo Chiu Ha, was suspected of building illegal structures measuring 2500 square feet at her village house, built with government subsidies under the small house policy.
Also in March 2021, ICAC announced an investigation named "Silver Grass," where 24 people were arrested for the fraudulent selling of ding rights in order to develop and sell property at a profit in Yuen Long. Those who were arrested included Yuen Long district councillor Ching Chan Ming, as well as lawyer Edward Kwong-wing Wong (nicknamed the "Small House King") of the firm Wong and Poon Solicitors, and Edward Wong's second son, Nelson Wai-shun Wong. In March 2022, ICAC charged Edward Wong for defrauding the government over 14 years for the sale of 115 small houses, and Ching for illegally purchasing "ding rights".
In April 2021, an opinion piece on Apple Daily said that after the NPCSC had ensured only "patriots" serve in the government and eliminated opposition, Carrie Lam would be "simply incompetent" if she did not try to end the policy again, as she called for in 2012. Separately in April 2021, three judges in the Court of Appeal endorsed and agreed that the issue should be moved to the Court of Final Appeal, stating that the debate on the policy "is plainly of great general or public importance which ought to be submitted to the Court of Final Appeal."
In June 2021, the Ombudsman, Winnie Chiu, said that unauthorised building works (UBWs) in New Territories Exempted Houses (NTEHs), which includes small houses, were supposed to begin eradication starting in 2012. However, after 9 years, "UBWs in NTEHs remain pervasive, including new works, in-progress ones, and blatant existing unauthorised structures already identified by the Building Department for priority enforcement. As such, I have decided to initiate a direct investigation to examine the enforcement measures undertaken by the BD and the Lands Department and their effectiveness in combating UBWs in NTEHs, and will make recommendations for improvement where necessary."
In October 2021, David Pannick, who was hired by the kuk to defend the policy, said in court that the plaintiff, Kwok Cheuk-kin, was simply a "busybody."
In December 2021, a reporter was attacked in Sheung Sze Wan Village while investigating a house built under the policy.
In August 2024, a 29-year-old villager filed a lawsuit against the government's plans to reclaim some villager land for the Northern Metropolis.
Assenting views
As a local policy formulated against the specific historical context of Hong Kong, the Small House Policy has brought some positive effects on both Hong Kong society and the British Colonial Government (and Chinese Central Government after the transfer of sovereignty over Hong Kong). The impact could be divided into three categories.
For the colonial government, the Small House Policy helped to ease tension between the government and indigenous inhabitants, and facilitated the development of New Territories land. Before the engagement of the colonial government, the indigenous inhabitants held the right to private ownership of the land in the New Territories, with the permanent land contracted conferred by Qing () and Ming () government. Through the exchange of "Ding" for ownership, the colonial government lowered the law-enforcement cost in the process of land ownership transformation, and provided opportunities for the current economic development of the New territories. After handover, according to Article 40 of the Basic Law, "the lawful traditional rights and interests of the indigenous inhabitants of the 'New Territories' shall be protected by the Hong Kong Special Administrative Region".
For the indigenous inhabitants of the New Territories, their benefits are substantial. Firstly, the inhabitants enjoy a hereditary privilege of land usage and housing grant, which is a great advantage regarding Hong Kong's population density and land shortages. Secondly, according to Lands Department of Hong Kong, after a five-year period, the villager can freely sell his property in the market without any restriction. After the grant of ownership transfer, the Small House Policy created huge and direct economic interest for the indigenous inhabitants. These benefits help to create a sense of pride and belonging to the indigenous villages which are useful in forging a bond among the indigenous villagers and to preserve their tradition.
Proponents suggest that, for Hong Kong society as a whole, the Small House Policy also brings some benefits. The policy, to a certain extent, guaranteed a sense of land security against environment pollution and over-exploration, and protected the original natural environment of New Territory during the urbanization and industrialization of Hong Kong. Under the Small House Policy and "Village Type Development" project, the villages in New Territories could keep their traditional lifestyle and features until now.
Opposing views
Despite the benefits mentioned here above, the small house policy does create a lot of controversies, which can also be divided into three categories.
First of all, the Small House Policy is fundamentally unsustainable. There was already over 14157 outstanding small house grant applications received until 2002, yet the number of potential applicants, who are eligible indigenous male villagers at least 18, is still increasing. It was estimated that the number of indigenous villagers with entitlements was going to reach 240000. In other words, if all of these 240000 entitled villagers were going to apply for small houses, there would be a significant uptake of over 2,200 hectares of Hong Kong’s valuable land resources. However, there is a dwindling supply of land in village areas to develop small houses. The imbalance of supply of land and demand for small houses will remain a major problem of the Small House Policy.