Frequently Asked Questions

Frequently Asked Questions Home Search

Hong Kong

1. What is the process for finding a property?

Usually, the property agency will assign a realtor to assist with the home search process. Once a property has been confirmed, an Offer Letter will be presented to the Landlord along with a Holding Deposit equivalent to one-month’s rent. If the tenancy takes effect, the Holding Deposit becomes the first month’s rent.

Once both parties have signed the Offer Letter, the next step is to proceed to the Tenancy Agreement (TA). The TA is the formal contract between the Landlord and Tenant. It outlines the terms and conditions that both parties agree to comply with over the duration of the tenancy. The realtor will assist with negotiating the terms for letting the property, for example, the monthly rental, the term of the tenancy (duration and commencement date), electrical appliances included, if any, etc.

Upon the signing of the Tenancy Agreement, the Tenant is required to pay a Security Deposit equivalent to two (2) month’s rent. The TA must be signed and presented to Landlord, along with the Security Deposit, before the property is handed over to the Tenant.

2. Who pays for the commission (agency fees)?

In Hong Kong, both landlords and tenants are liable to pay agency commission. The market practice is 50% of one month’s rent from each side.

3. Who pays the Government Rent and Rates and Management Fees?

Rental prices in Hong Kong are referred to as either “inclusive” of Government Rent and Rates and Management Fees, or “exclusive” of these additional fees. It is important that when a rental amount is quoted that you determine whether it is “inclusive” or “exclusive” of these extra fees. In general, if the rent is “inclusive” then the extra fees are for the account of the Landlord. If the rent is exclusive, then the extra fees are to be paid by the Tenant.

Government Rent and Rates are a form of property tax on leased accommodation, assessed by and payable to the Government at approximately 5.5% – 8.5 % of the approximate annual rental value.

Management Fees are paid to cover services such as: security guards; cleaning; and, maintenance of common areas and amenities. The amount varies depending on the number of units in the complex or building, the age of the building and the type, extent and quality of the amenities being offered.

4. What is a break clause?

A “break clause” is found in most Tenancy Agreements. This clause enables the Tenant or the Occupier to terminate their lease before the end of the agreed lease term (most lease terms are twenty-four months in duration, on the odd occasion a lease term may be for one year or three years however residential leases in Hong Kong may not, by law, extend beyond three years).

Usually a break clause takes effect after the first twelve months of the lease has been served at which point the Tenant can break the lease at the end of the first year by providing the Landlord with two (2), or three (3) months, written notice (the amount of notice required depends on the terms agreed upon and set-out in the Tenancy Agreement). As such, the minimum length of stay is either fourteen (14), or fifteen (15) months.

5. What is a diplomatic clause?

A diplomatic clause is similar to a break clause except that the right to terminate the lease will only arise when certain conditions are met. In most cases, a diplomatic clause will allow the tenant to break the lease only when the Occupant is being transferred out of Hong Kong or ceases to be an employee of the Tenant.

6. If I find a new place can I terminate my lease?

You may terminate your lease when your break clause takes effect. If your lease does not contain a break clause then you cannot terminate your tenancy until the term of your lease expires – the normal term for most leases is twenty-four (24) months. In rare cases, a landlord may allow for early termination of your lease where no break clause exists. Alternatively, you can choose to vacate the premises but pay the rent for the remainder of your lease period; however, doing so can prove to be quite costly.

7. What is stamp duty?

Stamp duty is a mandatory form of Government tax payable by the tenant and the landlord in equal shares, within 30 days of the signing of the Tenancy Agreement. The total amount payable on a two-year lease is 0.5% of the annual rent plus HK$5.00. Your realtor will complete this calculation and will request payment from you in the form of a personal cheque made payable to, “The Government of the Hong Kong Special Administration Region”. Your cheque will then be submitted by your realtor, along with the landlord’s portion, to the Hong Kong Government who in turn will process and stamp the Tenancy Agreement.

8. What does partially furnished mean?

A partially furnished property means that basic furnishings and appliances are included such as a: washing machine; fridge; stove; hood fan; oven; air-conditioners; and, in some cases window coverings and light fixtures.

A fully furnished property will include items such as: beds; sofas; and, dining table with chairs.

9. What is a Holding Deposit?

A Holding Deposit is equivalent to one-month’s rent and is made payable to the Landlord when an offer to lease a property is accepted. Holding deposits are usually refundable in full to the Tenant should the Tenancy Agreement not be signed. Upon the signing of the Tenancy Agreement the holding deposit becomes the first month’s rental.

10. What is a Security Deposit?

A Security Deposit is usually payable by the Tenant when the Tenancy Agreement is signed. This one-off payment, usually equivalent to 2 or 3 months’ rental, will be returned to the Tenant without interest when the lease expires, subject to any claims which the Landlord may have relating to the property.

11. What are some of the common expenses related to housing?

Common expenses will include: utilities, such as: electricity (air-conditioning); water; and, gas.

Other expenses include telephone, internet and cable TV.

In some cases club fees for fitness facilities may be required for apartment buildings or complexes that have gyms, swimming pools, etc. If these fees are extra they are usually not mandatory and if they are mandatory the fees are nominal.

12. Can I ask for new curtains or window coverings?

If there are acceptable curtains or window coverings already in place then it is unlikely that the Landlord will supply new ones. However, if no window coverings exist or the existing window coverings are not in acceptable condition then your agent, on your behalf, may be able to negotiate for the installation of new window coverings.

It is important to bear in mind that you should determine what changes or additions you would like to have the Landlord fulfill prior the presentation of the Offer Letter. Your agent will provide a list of your requests in the body of the Offer Letter for the Landlord’s consideration. Once the Landlord has agreed to, and signed the Offer Letter, it is unlikely that he will entertain requests for further additions or changes to the property.

13. Do all properties come with Cable and Broadband connection?

No! Most new apartments will have both cable and broadband connection but it is up to the Tenant to subscribe to cable TV or broadband internet/TV service. There are a few properties, mainly older ones, that do not have cable connection capabilities but it will be possible to install broadband internet and TV connection through the telephone system.

14. Who organizes the utilities, telephone, internet, and cable TV?

Some of the property agents will provide assistance for the connection of your cable TV, telephone, utility and internet services.

15. Can I make changes in my apartment, i.e. drilling of holes for hanging pictures, etc.?

The Tenant is not advised to make any major or minor alterations, renovations or additions whatsoever to the interior or exterior of the property without the prior consent of the Landlord.

16. Who do I call if I have problems with my property?

If you have any minor problems you can contact the on site management company located in your building or alternatively, call the property agency.

Information provided by Santa Fe, 2011

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