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City Weekend

Renting in Hong Kong? Here’s what you need to know

  • City’s red-hot property prices may be cooling down but there’s no relief in sight for rents as demand is still strong
PUBLISHED : Saturday, 22 December, 2018, 10:00am
UPDATED : Saturday, 22 December, 2018, 10:00am

Hong Kong property is the most expensive in the world. It is not surprising, then, that the proportion of people who rent their homes is rising. Census data shows that in 2006, 52.8 per cent of homes were owned or mortgaged by the people living in them, while 43 per cent were tenants. By 2016, 48.5 per cent of homes were owned by occupants, and the number of households renting had increased to 46.8 per cent.

Looming big vacancy tax is prodding city’s developers to sell empty flats

Yet there are signs that the red-hot property market is about to cool down: August saw the first dip in home prices in two years. Since then, the Post has reported, sellers have started cutting prices by as much as 10 per cent.

Factors behind this trend include rising borrowing rates, and an incoming vacancy tax on newly completed flats, intended to prevent developers from hoarding empty properties.

What could a slowdown in the property market mean for rents?

A drop in property prices is assumed to be good news for tenants – as rents are expected to fall too.

But Edina Wong, senior director of residential service at property consultant Savills Hong Kong, says a fall in home prices may not benefit tenants as much as hoped.

“Maybe there will be a softening of rents in the short term due to extra supply, but when people don’t buy, they rent,” Wong says. “So we’re forecasting that the demand for rentals will still be there – if not higher.”

As long as demand is high, rents are unlikely to come down.

Jittery individual homeowners cut prices by up to HK$800,000

Can landlords keep raising rents ?

In practice, yes. Hong Kong has no rental controls, so landlords and tenants can renegotiate the terms of a tenancy agreement every time it is due to expire. Edina Wong reminds tenants to stay in touch with their landlord – especially when their tenancy agreement is ending. “The landlord can come to you on the last day of the tenancy to start a negotiation,” she says.

Tenants should also pay particular attention to the responsibilities of their landlords.

“Unfortunately, tenancy in Hong Kong is very pro-landlord,” Wong says. “If you read a tenancy agreement carefully, you’ll notice it’s very one-sided.”

She gives the example of the upkeep of rental properties. In Hong Kong, while landlords are expected to cover capital and structural costs – such as plumbing maintenance and electrical wiring – any minor repairs are generally the tenants’ responsibility.

Wong adds that in her experience, tenancy agreements in Europe and North America often stipulate more responsibilities for the landlord.

Landlords brace for rent to decline as history shows leases tracking home sales

Can a landlord pressure a tenant to leave before the agreement expires?

According to the law, unless a tenant agrees to vacate the premises before the end date stated in the tenancy agreement, the property owner cannot even attempt to make the occupant leave.

The website of the Rating and Valuation Department states: “It is a criminal offence for anyone to evict a tenant or subtenant without a court order or to try to make him leave by intimidation, violence, withholding services (e.g. disconnecting gas, electricity, water supply, etc) or any other interference.”

It also stipulates: “Anyone convicted of such an offence is liable on first conviction to a fine of HK$500,000 and imprisonment for 12 months, and on a subsequent conviction, to a fine of HK$1,000,000 and imprisonment for three years.”

What laws cover landlord and tenant rights in Hong Kong?

That would be the Landlord and Tenant (Consolidation) Ordinance (Cap. 7). The ordinance brings together the numerous laws governing landlords and tenants, with the last major revision in 2004. If you rent in Hong Kong, it is worth gaining at least a passing familiarity with the document. The government’s Rating and Valuation Department keeps a straightforward summary on its website.

Where can tenants seek advice if they feel that their rights are threatened?

The Community Legal Information Centre (CLIC) is a service run by the University of Hong Kong, offering free, easy to comprehend information on a wide range of Hong Kong legal matters, including landlord and tenant issues.

Other organisations that offer advice on tenancy include the government, with its Rating and Valuation Department and the Estate Agents Authority, which publishes a tenancy guide.

CLIC and other sites can also instruct tenants on what to do if things escalate beyond a few terse emails. Residents who do not have barrels of cash to throw around but are confronted by a serious dispute may need to contact the Duty Lawyer Service, which has a free legal advice scheme, and nine offices around Hong Kong.