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Renting a House or Apartment in Hong Kong

The facts you need to know about renting a house or apartment in Hong Kong: the contract, the deposit, the lease and the legal obligations of the landlord and the tennant.

In a city with limited land, the cost of real estate in Hong Kong ranks as one of the world's highest whether for buying or renting.

Rental properties and rent prices vary significantly depending on the size, amenities, views and location. Normally, residential property is more expensive on Hong Kong Island in places such as the Peak, the Southside, Central and Mid-levels. Certain pockets of Kowloon such as Kowloon Tong and parts of Tsim Sha Tsui are also at the higher end. There are few single homes to rent in these areas. In the New Territories and the Outlying Islands there are more house to rent and they are less expensive.

The majority of Hong Kong's population lives in high-rise apartments varying in size from studios to spacious penthouses. In general, apartments are rented unfurnished but furnished apartments can be found. Fully serviced apartments are available in and around the city for both short and long term residents.

See The AngloFILE Serviced Apartments

Note: Apartments in Hong Kong are measured in square feet - one square metre equals 10.672 square feet.

How to Find an Apartment

The English daily newspaper, the South China Morning Post (SCMP), has daily listings of rentals, arranged by district, in its classified section. Every Wednesday it publishes a special edition on property. Advertisements for flats to rent can also be found in HK magazine and on websites of property agencies.

See The AngloFILE Property Rental and Housing Agents

Most properties have multiple listings, which ensure that most property agencies are likely to have access to the same information. However, some landlords prefer to deal on an exclusive basis with their agency of choice.

Tenants can appoint a licensed real estate agent to represent them in a search for the most suitable home. The commission fee is usually equivalent to one month's rent should the agent be successful in finding an apartment. The landlord will also pay commission of one month's rent to the agent.

When the agents representing the landlord and tenant are from different agencies, they enter into a "co-op" but the tenant and landlord will only be responsible for the commission of their own agent.

Negotiations

Apartment buildings vary in terms of amenities, age and size. Some luxury buildings may provide covered parking spaces, 24-hour security, swimming pools, gyms, tennis courts, clubhouses and even restaurants. At the other end of the spectrum are low-rise older buildings with basic services such as security.

While some apartments include appliances such as refrigerators, ranges with ovens and washers/dryers, others may provide only the basic range tops without ovens. If the landlord is willing, the tenant can ask the landlord to provide certain appliances and fixtures or opt for a discount in the monthly rent.

Rental price can usually be negotiated unless specified by the landlord. Monthly rental prices will be listed as either inclusive or exclusive.

Inclusive: the total monthly rent which includes monthly management fees and government rates
Exclusive: the management fee and government rates have not been factored in and must be calculated in order to determine the monthly rent rate.

The majority of people renting in Hong Kong will negotiate a fully inclusive rental agreement.

Once the tenant and landlord agree on the rental terms verbally, the tenant will generally sign an "offer letter" to put a stake on the property. This contains most of the basic contract guidelines. The landlord will come back with a "counter offer" letter or sign the original "offer letter".

The deposit

A holding deposit of one month's rent is given to a third party (for example the rental agent) for safekeeping until the final and formal contract is signed. That deposit will then be taken by the landlord and used as the first month's rent.

In addition to the holding deposit, landlords require a security deposit with the final contract. Security deposits are generally two months' rent but some landlords can request as much as three or more months' rent.

Pets

Not all apartment buildings allow pets; if relevant, check with the landlord before signing the rental agreement.

The Contract

There are no terms for rental contracts mandated by law. Most rental leases are standard and pre-drawn contracts are sold in stationery shops. However corporate landlords often have their own attorneys draw up contracts specifically for their properties.

There are two types of rental agreements:

They may be a contract between the landlord and a "company" representing the tenant or
a contract between the tenant and landlord, making this a "personal" lease

The only papers necessary for a personal lease is a copy of the Hong Kong ID or a passport. For a company lease, a Hong Kong ID or passport is required plus the company's business registration number. Landlords may sometimes require additional information such as an employment letter or salary statement.

The basic rental contract will contain the names and addresses of the tenant, occupant (when it is a company lease) and landlord. The contract may include but is not limited to:

term of lease
break clause
monthly rental amount
management fees
government rates
required security deposit
holding deposit
tenant's and landlord's obligations
any other terms that are negotiated into the contract by either party

The contract will also stipulate the amount of Stamp Duty or tax owed and shared by both landlord and tenant payable to the government of Hong Kong.

Both parties sign two copies of the contract – one is kept by the landlord, the other by the tenant. Documents must be sent to the Inland Revenue to be officially registered and stamped, they will then be returned to the landlord and tenant.

Ending a Rental Agreement

Neither the landlord nor the tenant can terminate the tenancy agreement unless there is a valid break clause in the agreement.

The standard lease is for two years with a break clause built into the contract and agreed by both parties. For example, a two-year contract with a one-year break clause may require the tenant to give two months' notice after the first year. Again, these terms can be negotiated.

A landlord is entitled to terminate a tenancy if the tenant is more than 15 days late in paying the rent. However, the tenancy can be maintained if the tenant pays all the outstanding rent.

Renewing a Lease

Under the "Landlord and Tenant (Consolidation) Ordinance" which took effect in 2004, the landlord has the right to take back the premises once a lease expires. Upon expiration of the lease, the decision whether or not to renew rests solely with the landlord. The terms of the new lease are negotiated between the landlord and the tenant.

Landlord and Tenant (Consolidation) Ordinance in full: Click here (PDF)

Disputes Involving Property

The government's Lands Tribunal consisting of professional judges, qualified surveyors and officers is set up to hear cases involved in property disputes.

For full information on the services of the Lands Tribunal: Click here

Costs Associated with Renting a Property

Apart from the agency fees (if applicable) and security deposit there are a number of other costs involved. Also, if the rent is an exclusive one, management fees and government rates need to be paid.

Stamp duty

Stamp duty is payable to the government on the signing of the lease and generally calculated as a percentage of the annual rent. This charge is shared equally by the landlord and the tenant. Leasing contracts need to be stamped within 30 days in order to be recognised by the court of law. Tenancy agreements that are not stamped may not be accepted in the event of civil proceedings.

The government has a website where stamp duty can be easily calculated: Click here

Government rates

These are a form of property tax levied quarterly by the government. Rates are due on occupation of the property and are paid as 5.5% of the "rateable value" of the property. This works out at about the equivalent to one month's rent. The rates are broken down into monthly figures although it is charged quarterly.

Management fees

These are paid to the building's management company and cover electricity and lighting costs in public areas, cleaning services, security staff and the maintenance of lifts. In general these are between five and ten percent of the monthly rental.

Insurance

The landlord will insure the apartment but tenants are recommended to take out contents insurance in case of fire, theft, typhoons, burst water pipes and so on.