Buildings, Government leases and building management

The building-related law an agent needs to describe a property accurately: Government lease conditions, the Buildings Ordinance and unauthorised building works, alterations and change of use, Deeds of Mutual Covenant, and owners' corporations under the Building Management Ordinance. The SQE tests this at awareness level, mostly as 'what does this term mean' and 'what should the agent tell the buyer'.

Part I · Stand-alone questions8 min read8 sections

Checked against the Conveyancing and Property Ordinance (Cap. 219), ss.14 and 41; Buildings Ordinance (Cap. 123), ss.14, 21, 24, 24C, 25, 26, 26A, 33 and 41; Building Management Ordinance (Cap. 344), ss.3, 3A, 4, 7, 8, 16, 17, 18, 34E, 34F and Seventh Schedule, and the Building Management (Amendment) Ordinance 2024 (in force 13 Jul 2025); New Territories Ordinance (Cap. 97), s.15; Residential Properties (First-hand Sales) Ordinance (Cap. 621), s.8; EAA Practice Circulars Nos. 07-05 (CR), 10-01 (CR) and 12-02 (CR); EAA, A Study Guide to Estate Agency Law and Practice, Parts 4 and 5; checked 11 Oct 2026.

Must-know for the exam

Land is usually held under conditions of sale, grant, exchange, regrant or extension; once the positive conditions are met, a Government lease is deemed granted (Cap. 219, s.14).
New grants are usually for 50 years at an annual Government rent of 3% of rateable value; breach of lease conditions lets the Government re-enter without compensation.
No building works may start without the Building Authority's approval of plans and consent to commence (Buildings Ordinance s.14). Works neither approved nor exempt are unauthorised.
s.41(3) exempts only works that do not touch the structure and are not drainage, site formation, ground investigation in specified areas or minor works.
A new building may not be occupied (other than by up to two caretakers) until an occupation permit or temporary occupation permit is issued (s.21).
A material change of use needs one month's notice to the Building Authority (s.25). Use in breach of the Government lease can make title defeasible.
A registered DMC binds all owners and their successors (Cap. 219, s.41). Each owner holds undivided shares as tenant in common, with exclusive use of the flat.
The management committee applies to the Land Registrar within 28 days of its appointment to register the owners' corporation (Cap. 344).
Seventh Schedule terms are implied into every DMC and override it (s.34E); Eighth Schedule terms apply only where consistent with the DMC (s.34F).
A judgment against an owners' corporation can be enforced against individual owners with the Lands Tribunal's leave (Cap. 344, s.17).

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Traps that cost marks

Assuming a formal paper lease always exists, or that any land is freehold.
Assuming every Hong Kong lease is a 999-year lease.
Thinking a landlord's consent can override the Government lease.
Thinking a lease breach is dealt with by a fine.
Assuming a small house can be sold to anyone as soon as it is built.
Accepting the manager's authority without the statutory consent.
Thinking the contractor submits the plans.
Thinking plan approval alone allows works to begin.

Why this matters in the exam

Part 5 of the SQE syllabus is set at Level 1 (awareness), but it feeds the duties you are examined on at Level 3. Form 1 asks for the year of completion, the user under the occupation permit and the Government lease term; the Vendor's Statement asks about structural alterations. If you misread an occupation permit or miss an unauthorised structure, you mislead the buyer, and that is a Code of Ethics and Practice Regulation problem.

Questions are short: the meaning of 'conditions of sale' or 'undivided shares', what a s.24 order does, who forms an owners' corporation and within how many days, and what an agent should say when a flat has a rooftop structure.

Government leases and their conditions

•Forms of lease: conditions of sale (land sold by tender or auction), grant (private treaty, for example a New Territories small house), exchange, regrant (on expiry) and extension (extra land). Once the positive covenants are performed, a Government lease is deemed issued (Cap. 219, s.14).
•Lot particulars: lot number, location, plan, area, term (now usually 50 years) and Government rent (usually 3% of rateable value, Cap. 515).
•General conditions: pay Government rent; Government's right to re-enter if any condition is broken, with no compensation for improvements.
•Special conditions: the permitted user, a building covenant (usually to build within 48 months), gross floor area and height limits, DMC approval, and no sale of units before compliance unless the Director of Lands consents (the Consent Scheme for pre-sales).

Older leases can carry restrictions such as 'private dwelling house only', a height limit or an 'offensive trade' clause that can affect restaurant use; removing them needs Government approval and often a fee or premium.

Special categories. A New Territories small house grant usually restricts sale, often until a premium is paid; check the grant and any waiver letters registered at the Land Registry. Tso and tong land is held by a registered manager for a clan under Chinese customary trust; any disposal needs the District Officer's consent (New Territories Ordinance, Cap. 97, s.15), so check the consent letter and any time limit on it.

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Salespersons Qualifying Examination