House Hunters - Useful Info

Terminology used in the Residential Leasing Market in Hong Kong

Rent

Always referred to on a monthly basis and payable in advance. Rent usually excludes Utilities (water, gas, electricity), Government Rates, Government Rent and Management Fees.

Rates

A tax paid on the occupation of property and generally paid by the Tenant. Levied as percentage of a Government Fixed Ratable Value (presently approximately 5% of the rental).

Management Fees

Normally cover building maintenance, security and cleaning service. Fees vary according to the standard of the building and facilities available. Generally charged in addition to rent and payable by the Tenant.

Car Parking

Provision for one carparking space usually included in the rent for properties with rentals in the higher bracket ($40,000-Up), but occasionally for less expensive properties too. May be open or covered spaces.

Floor Area

For leasing usually quoted on a gross basis. Definition can vary as to what is included in the net usable area. Gross area generally includes common parts.

Fixtures & Fittings

Residential premises are generally let unfurnished. Kitchens are usually fitted but often not equipped with appliances.

Rent Free Period

Depending on market conditions, can be given by the Landlord to allow Tenants to decorate their premises, should it not be done by the Landlord.

Rent Free Period is more common in commercial leases where Tenants usually carry the renovation cost.

Tenancy Agreement

Format varies but is usually based on the Tenant looking after the interior and the Landlord the structural parts of the premises. In case of any alterations be made to the interior by the Tenant, the Landlord normally expects the premises to be reinstated to its original condition on the expiry of the lease.

Duration of Tenancy (Lease)

Is usually two years. Occasionally three years may be obtained.

Protection of Tenancy

See Landlords & Tenants consolidation Ordinance available at Government Publications Office.

The Tenant

  • Tenancy Agreements are either signed by individuals, as a personal lease or by a company, for a company lease.
  • A Personal Lease is signed by an individual and his name or joint-names appears as the Tenant in the Tenancy Agreement. Tenant personally responsible for matters concerning the property.
  • A Company is the legal Tenant in a Company Lease and is responsible for matters concerning the property. The Occupant of the premises is usually a bona fide Employee of the Company.

Break Clause (Early Termination)

Normally requested by the Tenant. Landlords may grant a Tenant the option of early termination of the Tenancy by giving prior written notice. This provision is negotiable and normally depends on prevailing market conditions.

Deposits

a) Security Deposit

Usually equivalent to two months rent and retained by the Landlord for the duration of the Tenancy. This will be returned in full without interest provided nothing is damaged in the premise.

b) Holding Deposit

Paid by the Tenant to secure option to lease the premises whilst details of the Tenancy Agreement are being negotiated. It is advisable to receive written confirmation that this deposit is refundable.

Stamp Duty

Payable on all Tenancy Agreements. Cost usually shared equally by the Landlord and Tenant. Monthly Rental x 3% + $2.5 = half share of the Stamp Duty.

Legal Fees

Charges are based on Law Society scales. Each party generally pays their own costs, however, fees may be shared if both parties engage the same Law Firm.

Agency Fees

Property agents who locate premises and help to negotiate and conclude lease/purchase agreements charge a fee for their services. The purchaser / lessees pays these fees by 1% of sale price or 50% of the month rental.

Short term accommodation (less than six months period) is charged on a case-by-case situation.