Tenancy Knowledge

What is a tenancy agreement?

  • Tenancy agreement is a legal document and is binding on the signatories

  • Tenancy agreement specifies the responsibilities of the tenant and the landlord.

  • It is usually not necessary to use the services of a solicitor/lawyer for this.

  • The standard agreement lasts for one to two years, requires the monthly rent to be paid in advance, and contains some form of break clause of early termination.

  • The standard agreement usually is bounded by the first 12 months, that is, the Landlord and tenant cannot break the lease until the 13th month of the agreement. After that, either party can quit the agreement with one month notice in advance

  • A tenancy agreement has to be signed between the landlord and the tenant to protect each other's interests and avoid as far as possible future disputes.- The agreement will stipulate clearly the tenancy period, the rental level, the deposit and the rights and obligations of both parties. For example, it should state:

    • How to terminate the tenancy. (If not specified, fixed-term tenancies or periodic tenancies will terminate once the tenancy term expires.)

    • Rental amount, schedule and payment method etc

    • Whether rates and management fees are included in the rent

    • Deposit amount

    • Whether sub-letting is allowed by landlord

    • Procedures and cost of signing a tenancy agreement

    • Method of serving a notice with correct addresses & phone nos. of the landlord & tenant

    • Whether the “Home Ownership Scheme Properties” is subject to alienation restrictions and a certificate for Removal of Alienation Restrictions has been issued

  • A tenancy agreement needs to be stamped. This will be done by landlord, but the duties are usually shared by both the landlord and tenant.


If you have enquiry on tenancy matters, you could:

 

What are your rights and responsibilities as a tenant?

The following rights and responsibilities as a tenant are for your reference only. They are subject to the terms and condition stipulated in the tenancy agreement signed by both the tenant and the landlord. You may also read this booklet published by EAA which describes tenant/landlord right and responsibility in detail.
 

Rights

  • Before you rent the apartment, you have a right to ask the agent to show the copy of registered ownership. This serves to secure the rent is payable to the right owner.

  • In general, the landlord and tenant share all costs related to the signing of a tenancy agreement.

  • Charges for rates and management fee should be shouldered by either the tenant or the landlord, as stated in the tenancy contract.

  • Tenant has the right to use the premises. Landlord cannot disturb the tenant without special reason. For instance, landlord normally cannot enter the apartment without prior consent of the tenant.

  • Tenant can refuse to move even being requested by the landlord, if the tenant does not violate the tenancy agreement in the first year of tenancy.

  • Landlord is required to provide basic facilities inside the apartment eg. water, electricity, gas etc.

  • Landlord & tenant are entitled to terminate the tenancy agreement if the landlord fails to repair the property after a reasonable period.

  • Tenant is entitled to withhold rent if the property has become uninhabitable.

  • If any party breaches any term or condition in the tenancy agreement, the other party is entitled to terminate the agreement.

  • Either the landlord or the tenant can terminate the tenancy agreement by giving one month advance notice in the second year of tenancy.


Responsibilities

  • Pay the monthly rent on time.

  • Should not damage the provisions, structure, and fixture inside the rented apartment.

  • Should not make any alternations to partitions and fittings or make additions to the property without the landlord’s prior written consent.

  • Should not fail to comply with the general obligations. If not, the landlord may sue for damages.

  • Should not perform acts which will damage the benefit of the landlord without the consent of the landlord.

  • Examples include:

    • Sale of rented apartment

    • Allow commercial activities inside the apartment

    • Allow illegal activities inside the apartment

    • Subletting etc

 

Common terms in a tenancy agreement

Principal Tenant

If the flat is shared by more than one tenant, the landlord will normally deal with one representative rather than a cluster of tenants. This representative, who is the Principal Tenant, will:

  • Enter into tenancy agreement with the landlord;

  • Be responsible for the timely payment of rents.

  • Be the liaison person between the tenants and the landlord on all relevant matters;

  • See that the renting conditions are adhered to by all concerned etc.

Some apartments are partitioned into private rooms by landlord for rental purpose. In such situation, you usually do not need to find flamate on your own. These rooms are comparatively cheaper but they may be illegally refitted without housing and fire safety guarantee which you may need to consider before signing the tenancy.

Rent

This is the agreed monthly (calendar month) amount which remains the same throughout the term of the lease and which is either inclusive or exclusive of management fee, rates, or government rent. Usually the asking rent is subject to negotiation with the landlord.

Agent Fee

Money paid as commission to the property agent for assistance in finding a rental property. The fee is normally paid by the tenant and usually amounts to 50% of the first month’s rent.

Deposit

Money paid by the tenant prior to occupancy as security on the rental property. The amount usually required is equivalent to two months' rent plus one month's advanced rent. Additional money may be required as a deposit for management fees or utilities. The deposit is refundable upon expiry of the tenancy agreement provided there has been no damage and the terms of the lease have been honored.

Management Fee

A monthly charge payable to the management company that is responsible for the maintenance and security of the building and its amenity facilities. The fee is usually paid by tenants directly to the management company.

Tenancy Agreement

This is the lease (or rental) agreement that specifies the responsibilities of the tenant and the landlord. It is usually not necessary to use the services of a solicitor/lawyer for this. The standard agreement lasts for two years, requires the monthly rent to be paid in advance, and contains some form of break clause of early termination.

Stamp Duty

A levy imposed by the Government after the formal tenancy agreement has been signed by the landlord and the tenant. Both parties share the cost, amounting to 0.5% of the annual rent equally. In Hong Kong, a tenancy agreement must be stamped in order to be classified as a formal tenancy document which has legal effect under the Landlord and Tenant Consolidation Ordinance.

Rates

A charge levied quarterly by the Hong Kong Government which is equivalent to 5% of the estimated ratable value of the premises. Unless specified in the lease, rates are payable by occupiers of premises.

Government Rent

Rent payable to the Government by landlords (of properties situated in part of Kowloon and the New Territories). It is calculated at 3% of the ratable value of the properties. It is the responsibility of the landlord to pay government rent.