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A legal grey area has allowed the managing firm to rent out more than 10,000 estate parking spaces to non-residents
Link Reit, Hong Kong’s first real estate investment trust, has been profiting from a legal grey area for years by letting more than 10,000 hourly car parking spaces to non-residents or other unqualified users, despite rising concerns about a shortage of spaces for existing tenants.
Link currently owns 217 car parks providing 69,000 parking spaces in public housing around the city.
Generally speaking, these parking spaces may only be let to residents and occupiers of the premises as well as their visitors according to relevant land leases.
However, in the past few months, FactWire has visited 192 of the company’s car parks that offer hourly parking and found that neither Link, nor its car park management companies, had taken any steps to restrict the use of some 14,500 hourly parking spaces.
There are even different parking discount schemes that appear to attract drivers from outside the estates.
The government had said that, if Link were to let its parking spaces to unqualified persons, it would need to pay waiver fees in exchange for temporary waivers of the relevant lease restrictions. When the company was ordered to pay the waiver fees retrospectively in 2010, one exempted parking space incurred, on average, about $11,290 each year.
But it has come to light that in the past eight years, Link has only made one such application for a private car parking space, meaning that it may have dodged waiver fees to the tune of $163m.
Reply from the Lands Department:
FactWire’s report on Thursday (5 October) revealed neither Link nor its car park management companies had taken any steps to restrict the use of some 14,500 hourly parking spaces to specified users according to relevant land leases. There are even different parking discount schemes that appear to attract drivers from outside the estates.
The Lands Department issued a reply in the evening after FactWire released the report, which states that the department would strictly follow up the investigation and seek legal advice if necessary. If it is proven that Link has breached the relevant land leases, the department would carry out appropriate measures and retain the rights to step up any enforcement actions, including to take back the relevant lots or parts of property according to legal procedures as advised.
The department did not respond to FactWire’s enquiries on whether the ‘MTR park and ride scheme’ at Tin Shing Court and ‘long-stay parking privilege’ at Yat Tung Estate have breached the land leases, and whether the department would order Link to apply for temporary waiver for the 14,500 parking spaces or pay for relevant waiver fees in the past eight years.
Of the 217 car parks owned by Link, currently 192 provide hourly parking. Under the section ‘Parking Loading and Unloading Requirements’ in 146 relevant land leases, there are two types of conditions regarding the use of parking spaces.
The parking facilities of one public and 26 Home Ownership Scheme (HOS) housing estates fall into the first type: ‘spaces for the parking motor vehicles belonging to the residents of the residential flats in the building or buildings erected or to be erected on the lot and their bona fide guests and visitors’, while the rest belong to the second type: ‘spaces for the parking motor vehicles ‘belonging to the residents or occupiers of the building or buildings erected or to be erected on the lot and their bona fide guests and visitors’.
Some land leases also stipulate the proportions of parking spaces provided for residents of neighbouring estates, occupiers of retail facilities and non-governmental organisations as well as their guests.
Duncan Ho Dik-hong, barrister and a member of the Progressive Lawyers Group, said an occupier refers to the owner or tenant of a residential or commercial property, as well as anyone whom they allow to occupy the premises.
The 192 Link’s car parks that provide hourly parking are either managed by Wilson Parking or Urban Property Management. During our investigation since late August, all but two had notice boards at their entrances displaying parking rates, conditions of use and, in smaller font and at the bottom of the boards, reminders that only certain persons are allowed to park. (Note: There are no similar notice boards outside Lok Fu Market Car Park whereas Ying Fuk Car Park does not specify who are allowed to park.)
All of the car parks are installed with an automation system that uses electronic passes or Octopus cards for entry and exit. Barriers were usually not guarded by any security staff, and even if they were present, they made no attempts to verify the identities of their users.
In Tin Shui Wai, the land lease conditions of Tin Shing Car Park stipulate that only ‘residents of the residential flats in the building or buildings erected or to be erected on the lot and their bona fide guests and visitors’ are allowed to park. A sign at the entrance also states that it is for residents and their bona fide guests and visitors only.
But when FactWire visited the site from 10pm on 12 September to 1am the next day, we found that, of the 116 private cars and vans parked there, 36 were registered at addresses outside Tin Shing Court, including 25 from neighbouring private, public and HOS housing estates namely Tin Chung Court, Tin Oi Court, Tin Shui Estate, Tin Yiu Estate, Tin Tsz Estate, Tin Yan Estate, Kingswood Villas and Sha Kong Wai in Ping Shan.
Questionable parking perks
Since 2008 Link has also rolled out different parking perks in an attempt to lure drivers to its car parks, providing 12-hour and 24-hour parking in 123 and 89 car parks respectively.
‘Anyone can park inside as long as there are empty spaces,’ staff at various car parks told our undercover reporters, adding that there were no restrictions on who could use hourly, 12-hour and 24-hour parking. In mid-September, our reporters also managed to park at these car parks multiple times during peak hours and in the early hours after the attached shopping centres were closed.
There is strong evidence suggesting Link did not comply with the land lease conditions on the provision of its parking spaces, according to Ho, who specialises in land law.
‘The guards manage the car parks on behalf of the company,’ he said, ‘so obviously the lessee did not fulfil its responsibility if the guards said everyone could park here.’
Meanwhile, since June last year, Link has partnered with MTR to introduce a ‘MTR park and ride scheme’ that offers free parking hours to drivers who park at one of its eight designated car parks, including Tin Shing Court in Tin Shui Wai, and ride on the MTR. Drivers are also required to make purchases at the attached shopping centres using the same Octopus cards.
However, the land lease of Tin Shing Court clearly states that its car parks is for ‘the parking of private motor vehicles belonging to the residents of the residential flats in the building or buildings erected or to be erected on the lot and their bona fide guests and visitors’, meaning that, technically, neither retail tenants nor shoppers are entitled to park. ‘Link will have breached the relevant lease conditions if the scheme is intended to target shoppers or to attract people to shop before or after their MTR ride,’ said Ho.
Link may have also violated another land lease in Tung Chung by introducing a ‘long-stay parking privilege’ at Yat Tung Car Park by offering discounts to drivers who park there for three consecutive days without having to make any purchases in the adjacent Yat Tung Shopping Centre. Promotional posters for the perk, which can be found on Link’s website, feature a road sign for the airport, three suitcases and a car.
According to Ho, by implying to target air travellers on its posters, Link may have breached the lease conditions for Yat Tung Car Park, which stipulates for the provision of 1,753 parking spaces for residents of the estate, occupiers and their bona fide guests and visitors.
‘If you are a bona fide visitor, you would leave after a day of shopping at most. Why would you park your car there for three or even five days? Link does not seem to be playing by the rules.’
Both Wilson Parking and Urban Property Management declined to comment and referred our questions to Link when approached by FactWire asking if they were operating in accordance with the property owner’s requirements.
We then contacted Link asking whether the aforementioned practices had breached relevant land lease conditions, whether it had adopted all practical measures to ensure its hourly parking spaces are only being used by qualified persons, whether it would apply for the relevant temporary waivers for more than 10,000 hourly parking spaces it currently provides, and whether it would cancel the ‘MTR park and ride scheme’ at Tin Shing Car Park and the ‘long-stay parking privilege’ at Yat Tung Car Park.
Link responded on Wednesday that it had ‘clearly stated in the fee tables that only certain specified persons are allowed to park’, and that users of the ‘MTR park and ride scheme’ and ‘long-stay parking privilege’ must ‘meet the eligibility requirements specified in relevant land leases and deeds of mutual covenant which are stated in the fee tables and the terms and conditions for the relevant discount schemes.’
But Ho said the notices at the entrances showed that both Link and the management companies were aware of the relevant restrictions. ‘(The lessee) knows it cannot let the parking spaces to other people, so (the notice) is a way to protect its interests.’
Describing the situation as a ‘grey area’, he added that, on one hand, the Lands Department had never enforced the relevant lease conditions, while on the other, neither the government or the courts had clear guidelines on how the lessee could monitor who its short-term users were.
“If the wording of the land leases is vague, from a business point of view, the lessee (Link) will of course try to take advantage of the grey area,” he added.
Huge waiver fees
Current regulations provide that Link must apply for permission from the Town Planning Board as well as temporary waivers from the Lands Department if it wishes to let any of its parking spaces to non-residents. The Development Bureau has also said that the principle for determining the waiver fees is to ‘reflect the enhancement in the value of the property after the relevant lease restriction is waived’.
Based on real-time information on Link’s website, FactWire has used a system developed by the Journalism and Media Studies Centre at the University of Hong Kong to collect the numbers of available parking spaces at all of Link’s car parks that provide hourly parking for 70 consecutive days. (source code can be found at: https://github.com/jmsc-bc4j/linkhk)
Results show that, from 21 July to 28 September, Link provided at least 14,500 hourly parking spaces in 192 car parks where land leases require them only to be let to residents, occupiers and their bona fide guests. (Car parks that have more than 100 available spaces are indicated as ‘99+’ on Link’s website. We counted them as 100.)
A surveyor, who does not wish to be named, told FactWire that, since the Lands Department had never revealed the formula used to calculate the amount of temporary waiver fee for each application, one could only estimate the total outstanding fees in reference to previous similar applications.
According to a Legislative Council document in 2010 when Link was revealed to have had let 700 parking spaces to non-residents on a monthly basis from 25 November 2005 to 30 September 2009, the Lands Department demanded the company to pay a total of $30,295,690 in outstanding waiver fees, meaning that each parking space cost $11,290 per year on average.
If the Lands Department demanded Link to pay for the aforementioned 14,500 hourly parking spaces in a similar fashion, it would incur annual waiver fees to the tune of $163m.
A former senior management member at Link, who asked to remain anonymous, said that because the company had converted fixed monthly parking spaces to unfixed ‘floating’ ones in recent years – so that temporary users can park on spaces where their permanent tenants have left – it has become impossible to tell whether a parked car is on a monthly or hourly rate and thus, the identity of its owner.
Since 2012, Link has gradually replaced fixed monthly parking spaces to floating ones in most of its car parks.
Such measure has only made it difficult for the Lands Department and the public to monitor whether Link has complied with the parking requirements specified in land leases, he added, while it can take advantage of this legal grey area to lure even more ‘outsiders’ with various discount schemes such as ‘12 hours park’, ‘24 hours park’ and ‘One-link Pass’.
In 2016 when the Transport and Housing Bureau was asked by Legco lawmakers about Link’s increasing provision of 12-hour and 24-hour parking spaces as well as what mechanism was in place ‘to monitor and investigate’ if the company had breached the relevant lease conditions, the then secretary professor Anthony Cheung Bing-leung replied that although ‘land leases generally do not restrict the mode of operations of the car parks, such as letting of the parking spaces on an hourly or monthly basis’, Link ‘must comply with the lease conditions as the owner of the properties’ or otherwise it must apply for temporary waivers and pay the relevant fees.
The lawmakers also repeatedly requested the Lands Department to provide separate figures on temporary waiver applications from Link which specifically involved changing the number of parking spaces, only to be rejected citing time constraints and administrative reasons.
The department merely revealed that, from 2010 to May 2016, it had approved 96 waiver applications from Link, with one more still being processed. The bulk of the applications involved some 900 parking spaces and, for 2015 alone, waiver fees to the sum of $11m, although the total figures included relaxation of all types of restrictions: from changing the number of parking spaces to be provided or the types of vehicles to be parked, to allowing some of the parking spaces to be provided for parking vehicles of non-residents of the respective estates or those not specified in the land leases.
However, for the first time since the Housing Authority divested its public assets to Link in 2005, FactWire has obtained details of all of its temporary waiver applications through a Code on Access to Information request.
According to records provided by the Lands Department, from 2010 to May 2017, Link submitted a total of 129 such applications concerning 122 housing estates, including 33 that were eventually withdrawn or terminated. In all 96 applications that either have been or still being processed, only one private car parking space, which is at Sha Kok Estate in Sha Tin, has been exempted from its user restriction and is rentable for non-residents.
FactWire asked both the Housing Authority and the Lands Department whether Link has breached land lease conditions in how it operates its car parks and by introducing various discount perks, and whether the authorities will demand the company to apply and pay for relevant temporary waivers for the past eight years.
The Housing Authority’s press office only said that ‘Link must comply with relevant regulations and land lease conditions’ and referred our questions on land leases to the Lands Department, which did not comment before this story goes to press.
In 2005, the Hong Kong Housing Authority hived off 180 retail and car parking facilities of its public housing estates into the Link Real Estate Investment Trust for $33.8bn. But since 2014, the latter has already disposed of 28 shopping centres and car parks with only 152 assets remaining in its property portfolio.
According to Link’s 2016 annual report, it now manages 69,000 public estate car parking spaces with a total revenue of $6bn from car park rentals, while a quarter of which came from hourly parking, amounting to $484m.
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