Law firms expect a wave of ‘see you in court’ as landlords sue distressed tenants for unpaid rent
- Lawyers say enquiries on unpaid rent have surged with businesses overwhelmed by protests and pandemic
- Some of the companies involved in rent disputes with landlords include Bonjour and Prince Jewellery & Watch
Lawsuits relating to unpaid rents are on the rise as dozens of retailers hit by the economic downturn shut shop, with law firms in Hong Kong witnessing a massive uptick in enquiries seeking advice on recovery of arrears.
Lilian Chiang, senior partner and head of the property department at law firm Deacons, said requests were pouring in from landlords pursuing overdue rent and distressed tenants seeking to exit leases. Nearly 80 per cent of the those looking for advice were retail tenants and the rest lessees of offices, she said.
Such cases were “rare” last year, amounting to about one a month, but these have been slowly rising after the protests, turning into a torrent after the outbreak of Covid-19, Chiang said. “Some tenants can’t pay even after rents were reduced,” prompting landlords to seize their deposits, she added.
Hong Kong’s retail sales slumped 37 per cent in the first quarter – a record drop – as the Covid-19 crisis dampened consumer sentiment in the city. The poor retail sales were reflected in the first quarter gross domestic product, which contracted by 8.9 per cent year on year – the worst on record. The economy is expected to shrink by 4 per cent to 7 per cent for the full year.
The Hong Kong Retail Management Association, which counts thousands of retailers as members, says a quick rebound is unlikely because of the total collapse in tourism and the depressed economy.
