When private land has to be acquired for public purposes, usually to implement public works projects, it may be acquired either by negotiation or by resumption under the relevant ordinances. The ordinances provide for payment of compensation both for the value of the property resumed as at the date of acquisition and for business loss suffered. If agreement cannot be reached on the amount of compensation, either party can refer the claim to the Lands Tribunal for adjudication. As an alternative to statutory compensation, there is a system of ex gratia zonal compensation at pre-determined rates. It provides a simplified assessment procedure for agricultural land acquired in the New Territories, enabling the early release of compensation payments to the landowners to facilitate clearances.

A total of 25 914 square metres of private land, comprising 25 869 square metres of agricultural land and 45 square metres of building land, were acquired in 2005 to provide land primarily for road projects, drainage projects and a village expansion project at Wo Yi Hop in Tsuen Wan District where $423 million was paid in compensation.

The Lands Department was also involved in the resumption of land for implementation of urban renewal projects undertaken by the Urban Renewal Authority and the Hong Kong Housing Society. During the year, compensation totalling $370.22 million was paid to owners of 152 resumed properties and occupiers affected by 17 urban renewal projects in Hung Hom, Tai Kok Tsui, Sham Shui Po, Sai Ying Pun, Wan Chai, Shau Kei Wan, Tsim Sha Tsui and Tsuen Wan.

The Lands Department also continued to resume and clear land for the Kowloon-Canton Railway Corporation for implementation of its railway projects. By year-end, $20 million had been paid in compensation for land resumed for the West Rail project and $12 million for the East Rail Extension project which includes the Sheung Shui to Lok Ma Chau spur line and the Hung Hom to Tsim Sha Tsui line.