ISE10/15-16

Subject:

development, indigenous villagers, housing

• The Small House Policy was introduced in December 1972 with the objectives to improve the housing and sanitary standards in the rural areas of the New Territories.^{1Legend symbol denoting According to the Government's press release issued on 29 November 1972, the new Small House Policy and practices aimed at "giving people in the rural areas an opportunity to live in decent, safe, bigger and more permanent houses with improved health standards. [The measures set out in the Policy] are interim measures which will complement the major job of producing a comprehensive plan for the development of the rural New Territories." At that time, about 60% of the buildings in the rural New Territories were temporary or unlawful houses.} While improving the housing quality and living environment of the indigenous villagers over the past decades, the Small House Policy has aroused a number of public concerns amid changing social and economic contexts of the rural areas. Major issues of contention include sustainability of the Small House Policy, interpretation of the small house rights ("ding" rights) under the Basic Law, the progress on the Government's review of the Policy, disposal of small houses and the selling of "ding" rights.
• The Audit Commission (formerly known as Audit Department) issued two Director of Audit's Reports in 1987 ("DoA Report No. 10") and 2002 ("DoA Report No. 39") respectively setting out a number of recommendations to improve the operation of the Small House Policy. Following the publication of DoA Report No. 39 in 2002, the then Secretary for Housing, Planning and Lands informed the Public Accounts Committee of the Legislative Council of his plan to review the Small House Policy in a comprehensive manner and identify suitable options for resolving those problems associated with the Policy.
• The Government has on various occasions^{2Legend symbol denoting See, for example, Legislative Council (2012), Finance Committee (2014a) and Finance Committee (2015).} reiterated that it is unable to set a definite timetable for completing the review of the Small House Policy due to the complexity of the issues involved. In the Public Accounts Committee Report ("PAC Report No. 61") issued in February 2014, the Committee urged the Government to expedite the related policy review. The Committee has referred the issue to the Panel on Development for follow-up. The Small House Policy is now listed as one of the Panel's outstanding items for discussion. This issue of Essentials provides an overview of the Small House Policy, and highlights the major issues of concerns associated with the Policy.

Overview of the Small House Policy

• Under the Small House Policy, an indigenous male villager, who is aged 18 or above and descended through the male line from a resident in 1898 of a recognized village in the New Territories, may apply to the Lands Department once during his lifetime for permission to build for himself a small house of a regulated size^{3Legend symbol denoting As stipulated in the Buildings Ordinance (Application to the New Territories) Ordinance (Cap. 121), small houses must not contain more than three storeys and exceed a height of 8.23 metres, with a maximum roofed-over area not exceeding 700 sq ft.} on a suitable site within his own village. The villager can apply for the small house grant in the form of either:
  
  

  (a)	a building licence/land exchange. If the villager already owns private agricultural land, he can either apply for a building licence to build a small house on it at nil premium, or exchange his land with the Government at a reduced or nil premium; or
  (b)	a private treaty grant. If the villager does not own any agricultural land, he can apply for a private treaty grant on government land, if available, at a concessionary premium (generally about two-thirds of the full market value).

• In general, land suitable for building small houses is confined to areas within Village Environs ("VEs"), as well as the Village Type Development ("V") zones as stipulated in statutory town plans.^{4Legend symbol denoting Legislative Council Secretariat (2012).} VEs refer to a 300-feet radius from the edge of the last village-type house built before the introduction of the Small House Policy in December 1972. Land within V zones is primarily intended for development of small houses by indigenous villagers. The boundaries of V zones on the statutory town plans may not necessarily coincide with those of VEs.
• According to the Audit Commission^{5Legend symbol denoting See Audit Commission (2002).}, the Government has imposed (a) prohibition on transfer of "ding" rights, and (b) restrictions on small house assignment to prevent indigenous villagers from cashing in on their eligibility. Under the current arrangements, the terms of the prohibition and restrictions are incorporated in the conditions of building licence, land exchange and private treaty grant.

Prohibition on transfer of "ding" rights

• At present, in making an application to build a small house, the applicant is required to declare in the application form that he is the sole legal and registered owner of the land. To prohibit eligible indigenous villagers from transferring their "ding" rights, there is a warranty clause stipulated in the small house grant document in respect of the land lease granted by way of building licence, land exchange or private treaty grant. At the time of signing the document, the applicant is required to warrant that he has never made any arrangements to dispose of his interest of developing a small house or his eligibility to apply for a small house grant.^{6Legend symbol denoting The terms and conditions of the warranty clause are that "I have never entered into any arrangements or agreement with any person or persons to transfer, alienate, dispose or otherwise deal with the lot(s) or any part thereof or any interest therein or my rights in and over the lot(s), including but not limited to the right to develop the lot(s) or any part thereof (only applicable to private lots held by the applicants)", and "I have never made any arrangements to sell or otherwise dispose of my eligibility to apply for a grant of a Licence, Private Treaty Grant or Exchange of land under the Small House Policy of the Government for indigenous villagers in the New Territories". See GovHK (2015a).} According to the Lands Department, in case of any breach of this condition by the small house grantee/licensee, the District Lands Office will take lease enforcement action.

Restrictions on small house assignment

• In the small house grant document, there are also clauses to (a) prohibit alienation (i.e. the transfer of property ownership) before the issue of the Certificate of Compliance^{7Legend symbol denoting The Certificate of Compliance is an administrative measure whereby the Lands Department confirms that all positive obligations imposed by the conditions of the small house grant have been complied with.}, and (b) set out the requirements under which alienation may be allowed after such Certificate is issued.
• Small houses on private agricultural land granted by way of building licence/land exchange are normally subject to a five-year alienation restriction, i.e. the indigenous villager concerned cannot alienate his property within five years after the issue of the Certificate of Compliance. After the five-year period, the villager can freely sell his property in the market without any restriction. Yet the alienation restriction is perpetual for small houses on government land granted by way of private treaty grant. Nevertheless, the owner of a small house can apply to the Lands Department for removal of the relevant alienation restriction clause and pay an additional premium^{8Legend symbol denoting The additional premium is equivalent to the difference between the full market value of the land at the date of application to the Lands Department for removal of restriction on alienation and the premium previously paid (if any).} and an administrative fee if he wishes to transfer ownership of his small house during the above-mentioned alienation restriction period.

Issues of concern

• Since its introduction in 1972, the Small House Policy has lent support to many indigenous villagers in improving their living environment. The Lands Department has so far approved over 40 000 small house applications. However, the implementation of the Policy has given rise to a number of concerns, as discussed in the following paragraphs.

Sustainability of the Small House Policy

• Over the years, land for building small houses has been made available through measures such as expansion of village areas and approval of applications for building small houses on green belt land. The proportion of the small houses built on the villagers' private land and government land is not regularly provided by the Lands Department. Based on the small house applications approved during 2011 to 2013^{9Legend symbol denoting Finance Committee (2014b).}, about 88% of the cases involved private land granted by way of building licence. Government land granted by way of private treaty grant took up about 9%, while less than 3% of the approved applications involved land exchange. However, the number of new potential applicants grows each year as more male indigenous villagers reach the age of 18. There is concern about whether the Small House Policy is sustainable given the growing demand but limited land supply for housing. While the Lands Department is unable to compile statistics on or estimate the number of eligible indigenous villagers^{10Legend symbol denoting See GovHK (2015c).}, the Heung Yee Kuk estimated in the early 2000s that about 240 000 indigenous male villagers were entitled to build small houses.^{11Legend symbol denoting See Legislative Council (2003a).,12Legend symbol denoting Faced with potentially unlimited demand for but limited supply of land for small house developments, the Government once conducted an internal examination during the Small House Policy review initiated in 2002-2003 to explore the possibility of increasing the development intensity in certain village areas. By allowing multi-storey developments, it should provide a greater number of residential units to meet demand. Yet the Government in 2012 stated that allowing multi-storey small house developments was not a solution, as it would entail planning and building-control problems, and invite extremely divergent public opinion. See Housing, Planning and Lands Bureau (2006) and GovHK (2012).}

Interpretation of "ding" rights under the Basic Law

• According to Article 40 of the Basic Law, "[t]he lawful traditional rights and interests of the indigenous inhabitants of the 'New Territories' shall be protected by the Hong Kong Special Administrative Region". However, what constitute the lawful traditional rights and interests of the indigenous inhabitants are not explicitly stated. This gives rise to the question of whether the "ding" rights are "lawful traditional rights and interests" under Article 40 of the Basic Law. The Heung Yee Kuk, the statutory advisory body on New Territories affairs, is of the view that the interest being enjoyed by the indigenous villagers under the Small House Policy is one of the lawful traditional rights and interests.^{13Legend symbol denoting Legislative Council (2003b).} Indeed, when deliberating several bills relating to equal opportunities in the Legislative Council in 1997, the Government stated that in the absence of legal precedents, it could not be said for certain what would constitute "lawful traditional rights and interests of the indigenous villagers", and hence, whether the removal of the exception provision for the Small House Policy from the Sex Discrimination Ordinance^{14Legend symbol denoting Schedule 5 to the Sex Discrimination Ordinance, enacted in 1995, provides for the exemption of any discrimination between men and women arising from the Small House Policy.} would result in a breach of the Basic Law was a matter for the Court to decide.^{15Legend symbol denoting See Legislative Council Secretariat (1997a) and Legislative Council Secretariat (1997c).,16Legend symbol denoting In a court case relating to village representative elections (Secretary for Justice v Chan (2000) 3 HKCFAR 459, 477), a Judge of the Court of Final Appeal remarked that the rights under the Small House Policy fell within the scope of Article 40 of the Basic Law. According to Chan & Lim (2011), the case is concerned with the unrelated issue of electoral rights in the villages of the New Territories and as such, the afore-mentioned remarks are incidental which are not binding in future cases.}

Progress on the Government's review of the Small House Policy

• In response to the release of DoA Report No. 39 in 2002, the then Secretary for Housing, Planning and Lands indicated that he intended to pursue within the tenure of his office a review of the Small House Policy and related issues in a comprehensive manner, with the hope of resolving the associated problems once and for all within that time scale. In this connection, an Inter-departmental Steering Committee was set up to look into the matters.
• Various improvement measures have been introduced during the course of the review, including (a) streamlining the process of small house applications, (b) stipulating in the lease conditions of a small house grant that no prior arrangement for transfer or disposal of the applicant's beneficial interest is allowed (to be discussed in the next section of this paper), and (c) introducing a new set of fire safety requirements for small houses. In 2007, the Government however updated the Public Accounts Committee that the remaining issues were complex and required further deliberation within the Administration. Therefore, the comprehensive review could not be concluded within the expected time frame.
• In response to the Public Accounts Committee's repeated enquiries on the review progress in the subsequent years, the Government reiterated that the Small House Policy involved many complicated and sensitive legal, human right, land use and planning issues, and the interests of different parties and stakeholders. The review therefore needed to be carried out prudently. More recently, the Government has again stated that it recognizes the need to review the Small House Policy in the context of prevailing land use planning as well as optimal land resource utilization.^{17Legend symbol denoting See GovHK (2015c).} Yet, no definite timetable has been set for completing the review.

Disposal of small houses

• The issue of indigenous villagers selling their small houses soon after the issue of the Certificates of Compliance has existed for some time. Back in 1987, DoA Report No. 10 found that 19 of the 35 small houses just completed under the Tin Sum Village project^{18Legend symbol denoting The Tin Sum Village project was the first project introduced in 1981 under the Village Expansion Area Scheme to resume private land inside VEs for small house developments. Subsequent to the release of DoA Report No. 10 in 1987, the Lands Department introduced a three-year moratorium on removal of the restriction on alienation under the Village Expansion Area Scheme to ban the assignment of small houses in the first three years. See Audit Commission (1987).} had applied to the Government for removing the alienation restriction to enable the houses to be sold in the market. The Report concluded that the objectives of the Small House Policy, to provide house sites on which eligible villagers would build houses to live in and to improve their living environment, had not been satisfactorily achieved.
• Similar observations were found in DoA Report No. 39 released in 2002. The report unveiled that annually, there were on average over 500 cases of approved removal of the alienation restriction during the last five financial years, representing about 43% of the average number of Certificates of Compliance issued in a year. In response to the finding, the Government stated that the Small House Policy did not prohibit the villagers from applying for the removal of the restriction on alienation after the issue of the Certificate of Compliance, so long as they paid the relevant premium.^{19Legend symbol denoting See Audit Commission (2002).}
• In 2003, the Government further stated before the Public Accounts Committee that if the alienation of small houses was made in accordance with the terms of the restrictions, it was difficult for the Government to take the view that there was an abuse of the Policy by the villagers concerned, although the matter deserved attention.^{20Legend symbol denoting To prevent any potential abuse of the Small House Policy, the Government had proposed to extend the moratorium restriction imposed on projects under the Village Expansion Area Scheme to all types of small house grants. However, the Heung Yee Kuk objected to the proposal.}

Selling of "ding" rights

• DoA Report No. 39 also identified the problem of the selling of "ding" rights, as some indigenous villagers had possibly applied for a building licence for the construction of a small house on a piece of land which was in fact beneficially owned by another person.
• The clause prohibiting private arrangement for selling the "ding" rights was firstly set out by the Lands Department in 1997 as part of the applicant's statutory declaration.^{21Legend symbol denoting In October 1997, the declaration form for small house grant application included the following clause: "I have never made and have no intention at present to make any private arrangements for my rights under the Small House Policy to be sold to other individual/a developer". See Audit Commission (2002).} However, according to DoA Report No. 39, the Court of Appeal, when concluding an appeal case related to small house grants in June 2001, drew the attention of the Lands Department to the issue of illegal agreements on small house grant applications.^{22Legend symbol denoting The Court of Appeal said that "there are grounds to suspect that … agreements that were made between the parties … were illegal … there are grounds to consider that the agreements inevitably required that misrepresentations would be made to the Director of Lands through the District Land Offices as to the intention on the part of the various indigenous inhabitants to occupy the houses that were to be built". See Audit Commission (2002).} In July 2001, the then Director of Lands expressed that "land owners (either individuals or companies) took the initiative to recruit indigenous villagers who were eligible for small house grant as 'front men' to enable the land owners to develop small houses on their land. The indigenous villagers were prepared to 'sell' that eligibility and sign declarations which misrepresented their intentions. The Lands D[epartment] suspected that this type of thing had been going on for some time".^{23Legend symbol denoting See Audit Commission (2002).}
• Upon the release of DoA Report No. 39, an ex-officio executive councillor of the Heung Yee Kuk responded before the Public Accounts Committee that the Small House Policy had all along been implemented on the right track.^{24Legend symbol denoting Legislative Council (2003a).} However, the objective of the Small House Policy had not yet been achieved due to substantial number of indigenous villagers and insufficient land. The Heung Yee Kuk considered that the irregularities identified in court were independent and isolated cases and there was no abuse of the Small House Policy.
• Nevertheless, to address the potential problem of the selling of "ding" rights, in 2001, the Lands Department further included an additional clause in the statutory declaration that the selling, transfer, alienation or disposal of the indigenous villager's rights to small house grants was not acceptable to the Government.^{25Legend symbol denoting In October 2001, the Lands Department included the following additional clause in the declaration form: "I have never entered into any arrangements or agreement with any person or persons to transfer, alienate, dispose or otherwise deal with my rights in and over the Lot including but not limited to the right to develop the Lot pursuant to any grant or approval to be issued by the Government." See Audit Commission (2002).} Besides, it also restricted the use of Power of Attorney for the execution of small house grants.^{26Legend symbol denoting According to DoA Report No. 39, the Lands Department would not accept the use of Power of Attorney for the execution of small house grants with effect from June 2001, except under certain exceptional circumstances such as studying abroad of the villager, where his close relatives could be appointed as his attorney. However, the Heung Yee Kuk's report indicated that the Government had agreed in 2007 to remove the restriction that only close relatives could be appointed as attorney. Based on the Lands Department's document, the small house grant document should normally be executed by the applicant in person. If the applicant wishes to execute the small house grant document by his attorney under a Power of Attorney, the use of the Power of Attorney should be subject to compliance with the requirements and conditions imposed by the District Lands Officer. See新界鄉議局(2007) and Lands Department (2014).}
• However, the Heung Yee Yuk was concerned that prohibiting the transfer of "ding" rights by requiring statutory declaration might give rise to false declarations of the applicant if he had already engaged in such act before making the declaration and this might amount to criminal offence.^{27Legend symbol denoting This is based on the statement of the Heung Yee Kuk published in various Chinese-newspapers on 24 December 2015.} At the request of the Heung Yee Yuk, the Government agreed in 2006 and 2007 that the terms prohibiting the transfer of "ding" rights would no longer form part of the applicant's statutory declaration. They would instead be incorporated into the small house grant document as part of the land lease conditions. According to the Government^{28Legend symbol denoting See GovHK (2015a).}, the above arrangement was agreed considering that the approval of small house applications was a land administration matter. It stated that incorporation of the terms in the land lease would not affect the right of the Lands Department in taking lease enforcement action where breaches of the relevant terms are identified.

Recent developments

• In November 2015, a developer and 11 indigenous villagers were convicted by the District Court of conspiracy to defraud the Government by purchasing and selling the rights to build small houses during 2008, which involved the giving of false declarations by the indigenous villagers and the use of false documents to pretend they were eligible for small house grant.^{29Legend symbol denoting In this case, David Li Yam-pui, one of the defendants and operator of the property development company ("Developer"), recruited 22 indigenous villagers for using their names in the application for the construction of small houses in Tai Che, Sha Tin. In return, each indigenous villager received monetary rewards ranging from HK$130,000 to HK$250,000 from Li. Upon Li's instruction, a former staff of the Developer arranged for the indigenous villagers to sign sales and purchase agreements with the developer, purporting that they were the respective owners of the land lots on which they were applying for construction of small houses. However, the indigenous villagers did not actually pay for the land lots. The Court heard that the indigenous villagers also signed secret agreements with the Developer, which stated that they had agreed to transfer ownership of the small houses to the developer after the small houses were built. See Independent Commission Against Corruption (2015), and 香港特別行政區訴李欽培及其他人 區域法院刑事案件2015年25號.} The developer and the 11 indigenous villagers were jailed for up to three years.
• The above case arose from a corruption complaint and was followed up by the Independent Commission Against Corruption. The conviction provoked the question of whether the selling of "ding" rights involves criminal offences. In particular, the Heung Yee Yuk said that back in 2007, the then Secretary for Development had issued a letter to it saying that if grantees or licensees breached the terms prohibiting the transfer of "ding" rights, the Lands Department might confiscate the plots and this did not involve criminal conviction of grantees or licensees.^{30Legend symbol denoting See香港特別行政區訴李欽培及其他人 區域法院刑事案件2015年25號判刑理由書.}
• Against the above, the Lands Department subsequently issued a press release on 7 December 2015 stating that the lease enforcement action (such as revocation of free building licences granted and re-entry of the lot as appropriate) it took was not a criminal prosecution.^{31Legend symbol denoting See GovHK (2015a).} Yet the Lands Department stated that "[i]t is against the law to obtain the government's approval by deception through false representation or fraud. Criminal prosecution can be initiated if the illegal acts are established by the law enforcement departments, and this is so even if the person concerned has not made any statutory declaration about his not engaging in those acts".
• On 24 December 2015, the Heung Yee Kuk published a statement in several Chinese-language newspapers saying that the act of transferring villagers' "ding" rights did not involve dishonesty of the indigenous villagers and therefore should not be criminalized. According to the statement, the Heung Yee Kuk considered that the removal of the concerned terms from the statutory declaration and their subsequent incorporation into the land lease during 2006 and 2007 indicated that only civil action could be taken by the Government as the act of transferring "ding" rights should be, at most, considered as a breach of the land lease condition.^{32Legend symbol denoting This is based on the statement of the Heung Yee Kuk published on 24 December 2015.}
• The Heung Yee Kuk further said in the statement that if the Lands Department intended to forbid the activities of the selling of "ding" rights, it could simply require the applicant to also declare that he is the "sole legal and beneficial owner" of the land, in addition to declaring he is the "sole legal and registered owner" under the present requirement. Separately, it was reported that the convicted indigenous villagers were prepared to appeal against the District Court's decision with the help of the Heung Yee Yuk.
• On 25 January 2016, the Heung Yee Kuk further published an open letter in several Chinese-language newspapers urging the Secretary for Development to clarify the stance on the Small House Policy and whether the selling of "ding" rights was a criminal offence. In response, the Secretary for Development said that the selling of small houses and the selling of building rights were different matters, and cautioned that using inappropriate methods to trade "ding" rights was illegal and would not be tolerated. He added that as the case was expected on appeal, it was not appropriate for him to comment further at this stage.^{33Legend symbol denoting See the press release on "丁權和丁屋買賣不可混為一談" issued by the Government on 25 January 2016.}

Prepared by Tiffany NG
Research Office
Information Services Division
Legislative Council Secretariat
28 January 2016

Endnotes:

1.	According to the Government's press release issued on 29 November 1972, the new Small House Policy and practices aimed at "giving people in the rural areas an opportunity to live in decent, safe, bigger and more permanent houses with improved health standards. [The measures set out in the Policy] are interim measures which will complement the major job of producing a comprehensive plan for the development of the rural New Territories." At that time, about 60% of the buildings in the rural New Territories were temporary or unlawful houses.
2.	See, for example, Legislative Council (2012), Finance Committee (2014a) and Finance Committee (2015).
3.	As stipulated in the Buildings Ordinance (Application to the New Territories) Ordinance (Cap. 121), small houses must not contain more than three storeys and exceed a height of 8.23 metres, with a maximum roofed-over area not exceeding 700 sq ft.
4.	Legislative Council Secretariat (2012).
5.	See Audit Commission (2002).
6.	The terms and conditions of the warranty clause are that "I have never entered into any arrangements or agreement with any person or persons to transfer, alienate, dispose or otherwise deal with the lot(s) or any part thereof or any interest therein or my rights in and over the lot(s), including but not limited to the right to develop the lot(s) or any part thereof (only applicable to private lots held by the applicants)", and "I have never made any arrangements to sell or otherwise dispose of my eligibility to apply for a grant of a Licence, Private Treaty Grant or Exchange of land under the Small House Policy of the Government for indigenous villagers in the New Territories". See GovHK (2015a).
7.	The Certificate of Compliance is an administrative measure whereby the Lands Department confirms that all positive obligations imposed by the conditions of the small house grant have been complied with.
8.	The additional premium is equivalent to the difference between the full market value of the land at the date of application to the Lands Department for removal of restriction on alienation and the premium previously paid (if any).
9.	Finance Committee (2014b).
10.	See GovHK (2015c).
11.	See Legislative Council (2003a).
12.	Faced with potentially unlimited demand for but limited supply of land for small house developments, the Government once conducted an internal examination during the Small House Policy review initiated in 2002-2003 to explore the possibility of increasing the development intensity in certain village areas. By allowing multi-storey developments, it should provide a greater number of residential units to meet demand. Yet the Government in 2012 stated that allowing multi-storey small house developments was not a solution, as it would entail planning and building-control problems, and invite extremely divergent public opinion. See Housing, Planning and Lands Bureau (2006) and GovHK (2012).
13.	Legislative Council (2003b).
14.	Schedule 5 to the Sex Discrimination Ordinance, enacted in 1995, provides for the exemption of any discrimination between men and women arising from the Small House Policy.
15.	See Legislative Council Secretariat (1997a) and Legislative Council Secretariat (1997c).
16.	In a court case relating to village representative elections (Secretary for Justice v Chan (2000) 3 HKCFAR 459, 477), a Judge of the Court of Final Appeal remarked that the rights under the Small House Policy fell within the scope of Article 40 of the Basic Law. According to Chan & Lim (2011), the case is concerned with the unrelated issue of electoral rights in the villages of the New Territories and as such, the afore-mentioned remarks are incidental which are not binding in future cases.
17.	See GovHK (2015c).
18.	The Tin Sum Village project was the first project introduced in 1981 under the Village Expansion Area Scheme to resume private land inside VEs for small house developments. Subsequent to the release of DoA Report No. 10 in 1987, the Lands Department introduced a three-year moratorium on removal of the restriction on alienation under the Village Expansion Area Scheme to ban the assignment of small houses in the first three years. See Audit Commission (1987).
19.	See Audit Commission (2002).
20.	To prevent any potential abuse of the Small House Policy, the Government had proposed to extend the moratorium restriction imposed on projects under the Village Expansion Area Scheme to all types of small house grants. However, the Heung Yee Kuk objected to the proposal.
21.	In October 1997, the declaration form for small house grant application included the following clause: "I have never made and have no intention at present to make any private arrangements for my rights under the Small House Policy to be sold to other individual/a developer". See Audit Commission (2002).
22.	The Court of Appeal said that "there are grounds to suspect that … agreements that were made between the parties … were illegal … there are grounds to consider that the agreements inevitably required that misrepresentations would be made to the Director of Lands through the District Land Offices as to the intention on the part of the various indigenous inhabitants to occupy the houses that were to be built". See Audit Commission (2002).
23.	See Audit Commission (2002).
24.	Legislative Council (2003a).
25.	In October 2001, the Lands Department included the following additional clause in the declaration form: "I have never entered into any arrangements or agreement with any person or persons to transfer, alienate, dispose or otherwise deal with my rights in and over the Lot including but not limited to the right to develop the Lot pursuant to any grant or approval to be issued by the Government." See Audit Commission (2002).
26.	According to DoA Report No. 39, the Lands Department would not accept the use of Power of Attorney for the execution of small house grants with effect from June 2001, except under certain exceptional circumstances such as studying abroad of the villager, where his close relatives could be appointed as his attorney. However, the Heung Yee Kuk's report indicated that the Government had agreed in 2007 to remove the restriction that only close relatives could be appointed as attorney. Based on the Lands Department's document, the small house grant document should normally be executed by the applicant in person. If the applicant wishes to execute the small house grant document by his attorney under a Power of Attorney, the use of the Power of Attorney should be subject to compliance with the requirements and conditions imposed by the District Lands Officer. See新界鄉議局(2007) and Lands Department (2014).
27.	This is based on the statement of the Heung Yee Kuk published in various Chinese-newspapers on 24 December 2015.
28.	See GovHK (2015a).
29.	In this case, David Li Yam-pui, one of the defendants and operator of the property development company ("Developer"), recruited 22 indigenous villagers for using their names in the application for the construction of small houses in Tai Che, Sha Tin. In return, each indigenous villager received monetary rewards ranging from HK$130,000 to HK$250,000 from Li. Upon Li's instruction, a former staff of the Developer arranged for the indigenous villagers to sign sales and purchase agreements with the developer, purporting that they were the respective owners of the land lots on which they were applying for construction of small houses. However, the indigenous villagers did not actually pay for the land lots. The Court heard that the indigenous villagers also signed secret agreements with the Developer, which stated that they had agreed to transfer ownership of the small houses to the developer after the small houses were built. See Independent Commission Against Corruption (2015), and 香港特別行政區訴李欽培及其他人區域法院刑事案件2015年25號.
30.	See香港特別行政區訴李欽培及其他人 區域法院刑事案件2015年25號判刑理由書.
31.	See GovHK (2015a).
32.	This is based on the statement of the Heung Yee Kuk published on 24 December 2015.
33.	See the press release on "丁權和丁屋買賣不可混為一談" issued by the Government on 25 January 2016.

References:

1.	Audit Commission. (1987) Report of the Director of Audit (No. 10) on the Accounts of the Hong Kong Government for the year ended 31 March 1987 and the results of value for money audits.
2.	Audit Commission. (2002) Director of the Audit's Report No. 39. Chapter 8 - Small house grants in the New Territories.
3.	Chan, Johannes & Lim, C.Y. (2011) Law of the Hong Kong Constitution.
4.	Development Bureau. (2015) Replies to Legislative Council Questions at the Council meeting on 18 November 2015, LCQ1: Small House Policy.
5.	Finance Committee. (2012) Examination of Estimates of Expenditure 2012-2013. Controlling Officer's Reply to Initial Written Question. Reference No. DEVEB(PL)168.
6.	Finance Committee. (2014a) Examination of Estimates of Expenditure 2014-2015. Controlling Officer's Reply to Initial Written Question. Reference No. DEVB(PL)028.
7.	Finance Committee. (2014b) Examination of Estimates of Expenditure 2014-2015. Controlling Officer's Reply to Initial Written Question. Reference No. DEVEB(PL)367.
8.	Finance Committee. (2015) Examination of Estimates of Expenditure 2015-2016. Controlling Officer's Reply to Initial Written Question. Reference No. DEVEB(PL)047.
9.	GovHK. (2012) Press Releases: Caution urged over Small House Policy, 11 January.
10.	GovHK. (2013) Press Releases: Village Type Development zone, 30 October.
11.	GovHK. (2015a) Press Releases: Response to whether selling rights to build small houses involves criminal offences, 7 December.
12.	GovHK. (2015b) Press Releases: Small House Policy clarified, 7 December.
13.	GovHK. (2015c) Press Releases: Small House Policy needs review, 18 November.
14.	Hopkinson, L. & Lao, M. L. (2003) Civic Exchange. Rethinking the Small House Policy.
15.	Housing, Planning and Lands Bureau. (2006) Processing of Small House Applications and Review of the Small House Policy. LC Paper No. CB(1)951/05-06(03).
16.	Independent Commission Against Corruption. (2015) Press Release: Twelve jailed for fraud over construction of small houses, 4 December.
17.	Lands Department. (2014) How To Apply For a Small House Grant.
18.	Lao, M. L. (2013) Civic Exchange. Small House Policy II: An Update.
19.	Legislative Council. (2003a) Report of the Public Accounts Committee Report No. 39. Chapter 4 - Small house grants in the New Territories.
20.	Legislative Council. (2003b) Report of the Public Accounts Committee Report No. 39. Appendix 53 - Letter of 18 December 2002 from the Chairman, Heung Yee Kuk.
21.	Legislative Council. (2007) Report of the Public Accounts Committee Report No. 47. Appendix 6 - Letter of 11 January 2007 from the Secretary for Housing, Planning and Lands.
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