The Urban Renewal Authority was established in May 2001 to undertake a 20-year renewal programme. The Urban Renewal Strategy (URS), published in November 2001, sets out the policy guidelines for the authority's programme.

The purpose of urban renewal is to improve the living conditions of residents in older urban areas through a comprehensive approach involving redevelopment of dilapidated buildings, promotion of the rehabilitation of older buildings, revitalisation of old districts, and preservation of buildings of historical, cultural or architectural interest.

Following the Government's approval of the plans, the Finance Committee approved a $10 billion commitment in June 2002 to finance phased injections of capital into the URA from 2002-03 to 2006-07. A total of $8 billion had been injected into the URA by year-end.

The Housing, Planning and Lands Bureau keeps the delivery of the programme under close review through the annual examination of the URA's five-year Corporate Plan and its annual Business Plan. It also provides support and policy guidance to the URA, monitors and facilitates the implementation of individual projects — including vetting development projects with regard to objections raised under the statute — oversees land resumption and clearance exercises to be undertaken by the Lands Department and reviews the URS regularly to take account of the community's changing needs.

The Planning Department undertakes planning studies to assist in the formulation of the URS and its review. It has developed a comprehensive geographical information system, enabling relevant government departments to share information on building conditions when they draw up and update the rehabilitation schemes and the urban renewal programme. It is also involved in processing development schemes and master layout plans submitted by the URA for consideration by the TPB and in coordinating the provision of infrastructure, government, institution or community facilities and open spaces in URA projects.

By end of 2005, the URA had launched 25 redevelopment projects (three with preservation elements), seven of which were carried out by the Hong Kong Housing Society (HKHS) under the strategic partnership arrangement between URA and HKHS. The URA also continued its building rehabilitation schemes providing material incentives, technical assistance, interest-free loans, grants and subsidies for third-party liability for buildings that have been rehabilitated to owners in need to encourage them to undertake building maintenance. The URA is also planning and implementing a number of revitalisation projects, for example, the Mallory Street/Burrows Street project in Wan Chai, which aims to promote revitalisation by fostering cultural and creative industries while preserving pre-war shophouses.