Government explores land premium, tax incentives to boost urban renewal

[Photo: Lynzy Valles]

The local government is exploring land premium adjustments and tax incentives to make urban renewal more financially viable, while lawmakers are calling for easing ownership requirements and simplifying condominium management procedures for aging building repairs.

Replying to a written inquiry by lawmaker Ella Lei on urban renewal and land premium calculations, the Land and Urban Construction Bureau (DSSCU) stated that it is actively examining the feasibility of adjusting land premium rates for redevelopment projects involving aging buildings, as part of broader efforts to advance urban renewal while also exploring incentive measures including possible tax relief.

While affirming urban renewal as a key government priority, the bureau, in addressing lawmaker Ella Lei’s concerns regarding the substantial costs associated with building redevelopment – with many owners already facing considerable difficulty in raising funds before having to cover land premiums and other related fees – cited provisions under the Land Law which stipulate that the base amount for land premium calculations must be reviewed at least once every two years. The bureau further indicated its intention to actively explore additional incentive measures to promote urban renewal, with the objective of alleviating the financial burden on redevelopment projects and enhancing the incentives for both owners and market participants to engage in urban renewal.

Notably, a study on the city’s urban renewal priority development areas planning system is currently underway, with the aim of analyzing conditions in Macau’s older districts and exploring appropriate incentive and support measures.

The Macau Urban Renewal Limited (MUR) has indicated that it will offer professional support and technical advice to building owners within the existing legal framework, addressing questions regarding the redevelopment process and providing case-specific technical guidance and procedural support.

In parallel, the government is progressing with amendments to the Building Maintenance Fund regulations and related subsidy programs, with a view to expanding the range of eligible works and increasing funding amounts to assist owners in undertaking building maintenance. The Subsidy Scheme for Common Parts Maintenance of P and M Class Buildings is specifically targeted at low-rise buildings aged 30 years or older, and the introduction of an online application system is expected to encourage greater participation among owners of older low-rise buildings.

Nevertheless, lawmaker Nick Lei has raised concerns that the current ownership consent requirements for facade repairs and similar works are overly restrictive, and has called for thresholds to be lowered according to building age and district characteristics.

The redevelopment of older buildings in Macau is governed by the Urban Renewal Legal System, which permits compulsory participation in redevelopment with 80% ownership consent for buildings aged 40 years or older.

For buildings that are dilapidated and pose a threat to public safety, the threshold is reduced to 60%. This arrangement has attracted criticism, with some observers contending that the ownership consent thresholds under the Urban Renewal Legal System are inconsistent with the 100% consent requirement under the Land Law for amendments to land concession contracts.