From the first auction in June 1841 the government retained the freehold of virtually all land and disposed of it only by lease — initially for 75, 99 or 999 years — against a premium paid up front and an annual government rent. Development is steered as much by lease conditions on use, plot ratio and building covenants as by planning law, and changing them requires a lease modification and a further premium assessed by the Lands Department. The system passed intact to the SAR in 1997, with leases generally running to 2047.
Land premiums have supplied a large and volatile share of government revenue, financing an unusually low-tax, high-infrastructure state and underwriting the MTR's rail-plus-property model — public value capture achieved through landlordism rather than taxation. It also concentrated development capacity in the few firms able to bid for large lots and pay modification premiums, and made the release of land the central lever of Hong Kong housing politics.
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