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Hong Kong, 14 March 2022 – The Development Bureau (DEVB) announced its decision to grant extension of time to government works contracts and the building covenant (BC) period under land leases of private development projects in light of the latest COVID-19 development.
Government works contracts and land leases generally contain provisions stipulating completion deadlines to ensure timely conclusion of projects. In case of delay, contractors or lessees are required to apply for extension and may have to pay liquidated damages or land premium. The Government understands that the various processes of taking forward these projects are closely intertwined. From project design, manpower deployment and supply of materials to construction process, hiccups in any of these aspects could affect the project progress.
In view of the substantial impact caused by the latest wave of the epidemic on the industry, the DEVB announced that:
(i) for all government works contracts in progress, the Government will flexibly handle requests from contractors for extension of time, for up to a maximum period of six months; and
(ii) for all leases with unfulfilled BC as of 14 March 2022, the original expiry of the BC period may be extended at nil premium by up to six months.
The above measures aim to provide upfront certainty to various professions and contractors in the industry, so as to minimise unease and pressure that may be generated by the existing contractual deadlines and BC periods. These measures could also provide additional buffer for the industry and relevant government departments so that they would have more capacity to cope with the epidemic and participate in anti-epidemic work.
A spokesman for the DEVB said, “We look to the contractors and lessees granted with extension to handle the deadlines in their contracts with other contractual parties in a reasonable manner, such that other stakeholders in the production chain could also benefit from the extension by the Government.
In respect of development projects not subject to the restriction of BC period under the land lease (such as redevelopment projects which do not require lease modification), we appeal to the industry to handle the relevant contractual time limits by exercising flexibility in a sympathetic spirit during this difficult time.”
The works departments would follow up with the relevant contractors and the Lands Department would soon promulgate a practice note to set out the detailed arrangements for the extension of BC period.
Source: https://www.devb.gov.hk/en/publications_and_press_releases/press/index_id_11160.html
