Hong Kong Development Council: It is recommended to first implement a title registration system for new land and then deal with the transformation of existing land at a later stage

The Zhitong Finance App learned that the Secretary for Hong Kong Development, Ning Hanhao, said in a statement at the Legislative Council meeting today during the second reading of the “Registration of Titles and Land (Miscellaneous Amendments) Bill 2025” that in order to implement the new system as soon as possible, the Government is now proposing “easy first, then difficult”, implementing a title registration system (“new land first” scheme) for new land before dealing with the transformation of existing land at a later stage. The title registration system can provide clarity for land titles and simplify property transfer procedures, thereby providing a more favorable business environment and bringing Hong Kong's land registration system on line with other jurisdictions. After implementing the title registration system for new land, all parties can accumulate practical experience and help finalize arrangements for extending the title registration system to existing land in the future.

The land registration system currently implemented in Hong Kong is a contract registration system and does not provide a guarantee of property title. Therefore, when transferring a property, it is necessary to thoroughly check the previous title documents to determine the title, making the property transaction process complicated and lengthy, and the property owner must also properly preserve the title documents. Hong Kong is one of the few economies that still uses a contract registration system. The Government enacted the Land Titles Ordinance (Chapter 585) (“Title Ordinance”) in 2004 with the goal of replacing the contract registration system with a title registration system. However, since the implementation of the Title Regulations involves many implementation details, and the parties have yet to reach consensus on major issues, particularly how to convert existing land registration to a title registration system, the Title Regulations have not yet entered into force.

It is also common in overseas jurisdictions where the old and new systems operate in parallel for a period of time. It is hoped that the scope of implementation of the Land Titles Ordinance will be gradually expanded, and eventually the title registration system will completely replace the contract registration system that has been in place in Hong Kong for over 180 years. To achieve this ultimate goal, an internal study has been initiated to assess the scope and types of problematic registers among the 2.9 million existing land registers with a view to formulating recommendations for future transformation. When the “New Land First” programme is implemented in the first half of 2027, the Government will immediately discuss a viable conversion plan for existing land with stakeholders. The Bill proposes to first implement a title registration system for new land. It is a milestone in the development of Hong Kong's land registration system and an important step in the transformation of Hong Kong to a title registration system. Other key points of the current Bill include:

(1) Establishing the principle that title is irrevocable

To provide certainty of title and to be in line with arrangements in other jurisdictions, the Bill indicates that even if the property transaction involved fraud by a third party, a bona fide and unaware buyer who has paid a valuable price and owns the property can still enjoy an irrevocable title, and unaware former owners who fail to take back the property will be entitled to compensation under the Land Title Compensation Fund. In other words, although the “Title Regulations” enacted in the early years stipulate rules that unaware landlords can obtain an order issued by a court to correct title registration records, this rule will not apply to new land to meet the general principle that title registration records are irrevocable evidence of title under the title registration system.

(2) Reverse ownership will not apply to new land

Since the purpose of the title registration system is to provide clarity of title, the Bill suggests that new land under the “New Land First” scheme will not accept reverse ownership claims.

(3) Compensation limits and levies

Referring to arrangements in other jurisdictions, the Ownership Ordinance suggests the establishment of a compensation fund to bear its own profits and losses according to the “user pays” principle to pay compensation to those who have lost their right to unemployment due to fraud by a third party. The fund will be established through levies on the transfer of properties registered under the title registration system. It is proposed to set a levy rate of 0.014% for each property transfer, that is, a levy of 140 yuan must be paid for every 1 million yuan of property value, and the compensation limit is 50 million yuan. It is expected that more than 99% of property transactions will be fully covered. The levies and compensation mentioned above only apply to future property transactions involving land registered under the title registration system.

(4) Reducing the risk of property fraud

To reduce the risk of property fraud, a number of provisions have been introduced. It is proposed to reduce this risk through a number of measures, including that an application for title registration must be accompanied by a verification certificate issued by a lawyer; issuing a certificate of title with advanced anti-counterfeiting characteristics to the property owner; authorizing the Land Registrar to make a restraining order when there are reasonable grounds to suspect that there is or is imminent property fraud, prohibiting relevant title registration for a property; and that fraudulently submitting a registration application or compensation application is a criminal act and is subject to criminal liability.