Transfer of development rights as an institutional innovation to address issues of property rights

Abstract

Many densely populated cities face the issues of limited usable urban land, and the redevelopment process may threaten the built heritage. Government, in serving the public interest, often intervenes through administrative or regulatory means in the conservation of these privately owned heritage buildings during urban renewal, even though such intervention may violate private property rights to different degrees. Yet, the general law of most developed and developing countries, though in different forms, is meant to protect private property rights. So, it is important to devise a fair and workable mechanism, supported with an innovative institutional arrangement, to control development of privately owned properties. Transfer of development rights (TDR) is one institutional innovation that can balance the conflict between public and private interests to supplement the defect of planning law. Before using TDR to address the property rights issues, there are some concerns that need debating. These include: whether development rights are property rights or not; the impact of conservation on property value; and the role of TDR on property rights, compensation or mitigation of the affected property. This research study begins by analyzing the relationship between property rights and development rights, and exploring how property rights, planning law and TDR interact with each other. It then takes Hong Kong as a typical example among the dense cities to examine the TDR programmes for built heritage conservation and identify the challenges of TDR. Due to the institutional-based characteristics of TDR, the research utilizes a comparison of TDR in Hong Kong with those in other jurisdictions from the perspective of property rights to extend the research result to wider application. The most recent controversial court case in Hong Kong (the ‘Hysan’ case) is discussed to illustrate the intricacy and controversy evolving around this issue. Finally, the research proposes strategies for the improvement in TDR, based on Hong Kong and overseas experiences from the perspective of legislative amendments, protection of property rights and of other stakeholders’ rights.