Landlords of Hong Kong’s subdivided flats could still raise rent by up to 15 per cent under new tenancy control bill

The yearly rental index on the tiny flats will not take inflation or affordability into account as some have previously suggested, sources tell the Post

Critics argue the cap is too high, noting increases for public housing accommodation have a ceiling of 10 per cent, and fear landlords could rush to raise rents before law takes effect

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A new tenancy control bill set to be unveiled on Wednesday would cap how much landlords can increase rent by, though critics say the ceiling is too high. Photo: Elaine Lok

Published: 8:00am, 29 Mar 2021Updated: 1:54pm, 29 Mar 2021

The landlords of nearly 100,000 subdivided Hong Kong flats will be subject to a new rental index under a proposed tenancy control bill designed to protect some of the city’s poorest residents, but the formula could still allow for rent increases of as much as 15 per cent, according to sources.

The index is also not expected to take inflation or affordability into account as previously suggested. The exact formula will be set out on Wednesday when the proposal is officially unveiled.

Critics have argued the 15 per cent ceiling is too high, compared with the 10 per cent cap on public housing units, while noting landlords could race to raise the rent before the law kicks in. They have also urged the government to consider incentives encouraging landlords to pay better attention to the maintenance and overall condition of their flats.

Hong Kong’s Sham Shui Po neighbourhood is home to many subdivided flats that could fall under the new tenancy control bill. Photo: Sam Tsang

Earlier, the chairman of the government-appointed task force that led the tenancy control study said multiple factors, such as the consumer price index – which takes inflation into account – could be considered in setting up the mechanism.

“But now, inflation and affordability will not be a factor in the mechanism. There was not much discussion on that in the task force,” a source told the Post. “Affordability was not considered because the government has no information about the income of the tenants. It’s not like the rent mechanism for public housing, where residents’ income data is gathered.”

The proposal would also allow tenants to secure a lease on fixed terms for two years, with the option of renewing it for another two years.

About 99,000 families are believed to live in the type of flats covered by the changes, according to a government report last December. These homes are mostly in older buildings privately owned by individuals or companies and often found to contain health, fire and structural risks.

The plan to impose tenancy control was first announced by city leader Carrie Lam Cheng Yuet-ngor in January 2020 in a bid to address the housing crisis, long viewed by Beijing as one of the city’s most “deep-seated” problems.