Property rights of housing for "indigenous inhabitants" : an institutional study of the “small house” in Hong Kong

Abstract

Introduced in 1972, the Small House Policy is popularised as a controversial policy that the public viewed the right under the Policy is a privilege exclusive to the indigenous inhabitants in the New Territories. This view is denied by Lai (2000), since the Policy serves as a partial return to the indigenous inhabitants for their forfeited property rights under the introduction of the leasehold system in the New Territories in 1898. In this dissertation, the property rights of the indigenous inhabitants settling in the New Territories are examined from economic perspectives. By reviewing the changes in the small house application forms, official documents and court judgments related to the indigenous rights, specifically the recent decision on the legitimacy of the Small House Policy by the Court of Final Appeal, a summary of the Small House Policy development is mapped out in this dissertation, followed by the identifying the changes of the property rights of the indigenous inhabitants in the New Territories. It is found that the alienation of de jure rights under the Small House Policy, including the right entitlements and the legal rights, is continuously evolving. The institutional arrangements under the Small House Policy increase the transaction costs for the alienation of indigenous inhabitants’ rights, thus attenuating the private property rights of the indigenous inhabitants and lowering the efficiency in the resource allocative outcomes. All in all, the right to build small houses under the Small House Policy is the de jure right of the indigenous inhabitants same as the rights enjoyed by the villagers before the introduction of the Small House Policy, yet have been attenuated.