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.

Lease vs Tenancy

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:

Licence

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. The licensee does not need fixed occupancy periods, and they do not establish any vested interest in the property

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

How To Rent A Property In Hong Kong

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

1. Consultation:
   The process begins with the client discussing their leasing needs with a consultant. The consultant compiles a list of suitable properties that match the client’s requirements.
2. Viewing:
   Viewing appointments are arranged to allow the client to assess the properties in person.
3. Negotiation & Offer:
   If the client finds a property they like, they submit a verbal or formal offer to the landlord. If needed, negotiations take place between the tenant and landlord to finalize the renting terms.
4. Lease/ Tenancy Agreement:
   Once agreeable terms have been reached, a comprehensive lease or tenancy agreement is prepared and signed by both parties, solidifying the terms. The lessee tenant will need to pay a security deposit (usually rent of 1-3 months), agency consultation fee, and stamp duty.
5. Property Handover:
   The landlord hands over the property to the tenant either at the start of the lease or at an agreed early possession date.

Required Documentation

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

• A copy of your passport and Hong Kong ID (if applicable)
• A copy of Valid working permit
• A copy of your Employment letter and contract (if applicable)
• Your Bank account details

Need assistance with getting a working permit in Hong Kong? Get more information about Working Visa and our services here.

Things to Consider When Renting a Property in Hong Kong

Rent and other Payment

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). Landlords can initiate eviction proceedings if the tenant’s rent is overdue by more than 15 days or if consistent delays occur.

Break Clause

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.

Security Deposit

The landlord holds a security deposit, equivalent to two to three months’ rent, during the lease or tenancy. They return it within 7 to 14 days after the tenant fulfills obligations and returns the property in proper condition.

Stamp Duty

You must pay stamp duty 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.

Prevailing rates, lease duration, and tenant’s rent payments determine the stamp duty amount: If the term is not over one year, the stamp duty is 0.25% of the 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.

Management Fees

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

Landlords often pass government rates, typically 5% of the rental amount, onto tenants. These charges are billed quarterly in advance, and payment responsibility is indicated in the agreement.

Utilities

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

Maintenance and Repairs

The agreement outlines whether the landlord or tenant is accountable for property maintenance. We advise conducting a comprehensive inspection, highlighting issues like water pressure and electrical points, and reporting any concerns to the landlord.

Furnishing

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.

Renewal Option

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 the agreement includes a renewal option clause, it preserves the tenant/lessee’s renewal rights.

Insurance

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