How To Rent in Hong Kong – Renting Agreements

To rent is to have a legally binding contractual arrangement that grants an individual, organization, or entity the right to occupy and use a property owned by another party for a specified period.

Residential and commercial rent encompassing industrial premises, office spaces, retail establishments, and hotels are typically regulated by the Landlord and Tenant (Consolidation) Ordinance, as well as the Land Registration Ordinance and the Occupiers’ Liability Ordinance.

Although “Tenancy Agreement” and “Lease” are used interchangeably a lot, there is a nuanced legal distinctions in meaning despite their general enforceability in Court. Hence, you will need to choose between a Lease and Tenancy according to your renting needs. The differences are illustrated in the table below:

Alternatively, a licence offers permission to occupy a property without conferring exclusive possession or a proprietary interest. Unlike a lease, a licensee does not hold any proprietary claim and lacks the right to exclusive possession.

Moreover, licences are usually not transferable to third parties and do not bind successors in title of the licensor. Occupancy periods under a licence need not be fixed and don’t establish any vested interest in the property.

Hence, those who rent will more commonly seek for a lease or tenancy.

Here is a Step-by-Step Guide to Renting a Property in Hong Kong:

Before finalizing the lease or tenancy agreement and securing a rental property, you will usually be asked for the following documents:

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The renting agreement outlines the rent fees, excluding management fees and rates. It’s crucial to specify the payment schedule (usually monthly) and method (check, cash, or bank transfer). Notably, eviction proceedings can be initiated if rent is overdue by more than 15 days or consistent delays occur.

The presence of a “break clause” in the agreement indicates the possibility of termination under specific circumstances. After the first year, termination is feasible with one or two months’ notice.

A security deposit, equivalent to two to three months’ rent, is held by the landlord during the lease or tenancy. It’s returned within 7 to 14 days after fulfilling obligations and returning the property in proper condition.

Stamp duty must be paid on tenancy agreements or leases as per the Stamp Duty Ordinance (Cap. 117). Failure to properly stamp a tenancy agreement or lease renders it unregistrable at the Land Registry and inadmissible as evidence in court for enforcement.

The stamp duty amount is based on prevailing rates, lease duration, and tenant’s rent payments: If the term is not over one year: Stamp duty is 0.25% of monthly rent multiplied by the number of months.

If the term is over one year but within three years: Stamp duty is 0.5% of the average yearly rent. If the term exceeds three years: Stamp duty is 1% of the average yearly rent.

In addition to rent, management fees encompass maintenance, security, and amenity upkeep. Fees may increase with more extensive amenities. The agreement should explicitly state which party bears the responsibility of payment.

Government rates, typically 5% of the rental amount, are often passed onto tenants by landlords. These charges are billed quarterly in advance, and payment responsibility is indicated in the agreement.

Unless otherwise noted, tenants are accountable for utility costs such as phone, gas, and electricity. Negotiations may incorporate these expenses into the contract terms.

The agreement outlines whether the landlord or tenant is accountable for property maintenance. A comprehensive inspection is advised, highlighting issues like water pressure and electrical points, with any concerns reported to the landlord.

A detailed inventory of leased furniture and appliances is crucial. While some appliances may be included (e.g., stovetops, refrigerators, washing machines), others may not be part of the arrangement.

Upon expiration of the lease or tenancy, the owner of the property will have the right to renew at the prevailing market rental rate. If a renewal option clause exists in the agreement, the tenant/ lessee’s renewal rights are preserved.

The landlord communicates property insurance coverage to the tenant. Lease terms may necessitate the tenant to cover extra premiums arising from their actions.