Ignorance costs tenants 'millions'
TENANTS are 'throwing away millions of dollars' in compensation because they do not know their rights under the landlord and tenant legislation, according to lawyer Raymond Hayes.
Mr Hayes, who works for Deacons, specialising in landlord and tenancy matters and has written a number of articles and a book on the subject, said he knew of cases where companies paid millions in rent increases.
They did not want to go to the trouble and expense of a Lands Tribunal hearing, when they could have actually bargained from a position of strength and negotiated a lower rent.
In other cases, he said families vacated flats which were to be demolished and redeveloped and accepted a few thousand dollars in compensation, when they were entitled to hundreds of thousands of dollars in compensation.
Mr Hayes said the problem was residents were ignorant of their rights under the law.
Michael Choi Ngai-min, president of the Society of Hong Kong Real Estate Agents, said ignorance also applied to landlords who might not know anything about the legislation.
'Most tenants and landlords have never heard of Form CR 101,' he said. 'One has to educate people about their rights under the legislation.' Mr Choi said it was a good idea for estate agents to inform tenants of their rights under the law when signing leases.
According to government statistics, the Lands Tribunal received 5,500 applications to help settle landlord and tenant disputes last year.
But this was probably only the tip of the iceberg considering there were 688,000 private tenancies in the territory, many of which could use the services of the Lands Tribunal, Mr Hayes said.
'That means over 95 per cent of people aren't availing themselves of their legal rights and therefore, in many cases, they are prejudicing themselves unfairly,' he said.
For instance, many tenants do not know they can fight eviction and even rent increases, thanks to a form called CR 101. This form must be properly filled out and sent by the landlord to the tenant informing them their tenancy will expire.
As a result of sending this form, the landlord can then inform the tenant his rent is being increased.
But many landlords either do not use the form, do not know how to fill it out properly or do not send it at the right time - six months before but not more than seven months before the termination of the lease.
The result is in many cases, the notice of the termination is invalid until the landlord properly fulfills the requirements as required by the legislation.
In the meantime, the tenant can continue to live in his flat at the old rent.
The legislation also stipulates the amount of compensation which a tenant is entitled to if a landlord wants to redevelop the site, which is 1.7 times the ratable value of the property.
In general, the tenant was entitled to receive a lump sum of about 20 months of rent, said Mr Hayes.
Another common problem encountered by tenants is the landlord informing them they have to move out because the flat has been sold. But unless the landlord wants the flat back to live in himself or to redevelop, tenants are under no obligation to move out at all.
Some tenants believed because a tenancy had expired, they must move out. But Mr Hayes said the landlord could not simply evict a person.
Under the law, the tenant has the automatic right to a renewal of tenancy at the prevailing market rent.
In some cases, a lease stated a tenant could not use any legal redress to remain in the property if the landlord wanted him out, said Mr Hayes. Again, under the legislation, that was wrong.
Many people shy away from the Lands Tribunal because they think it will involve high legal costs and involve long and complicated hearings.
But, according to Mr Hayes, the Lands Tribunal which arbitrates disputes is sympathetic to the tenant appearing on his own and the court does not make the user pay the costs.
'Many tenants are prepared to settle a dispute before the expiry date of their lease and they paint themselves into a corner,' he said.
