The leasehold system as a land management measure to attain sustainable development planning by contract : A Hong Kong case study

Purpose – The purpose of paper is to investigate the institutional features of the leasehold system of Hong Kong, which is predicated on the freedom of contract as an institutional arrangement for land management and planning that promotes sustainable development. Design/methodology/approach – The approach is analytical, using concepts of property rights informed by Coasian neo‐institutional economics and the ideas of Yu et al. on the Schumpeterian process in innovation. Findings – It was demonstrated that the post‐contractual imposition of statutory planning control on the leasehold land management system in Hong Kong has adversely affected and adaptability of the leasehold system in achieving sustainability. Research limitations/implications – This paper encourages a reinterpretation of statutory zoning in areas with a leasehold system and the reception of the land lease as a basis for innovations that help promote sustainable development. Practical implications – This paper warns against legislative activism in planning controls as that can destroy or erode the basis for innovations that help promote sustainable development. Originality/value – Using the idea of innovations of Yu et al. and Lai and Lorne, this paper further develops Lai theory of “planning by contract” as an alternative to “planning by edict”.