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Privately-rented Housing - Guidelines and FAQs

A "MUST-READ" book: 
"Tenancy Guide for Non-local Students in Hong Kong" by Estate Agents Authority of Hong Kong:
http://www.eaa.org.hk/Portals/0/Sections/CC/TenancyGuideForNonLocalStudentsInHongKong.pdf


Guidelines
  1. Points to note before signing an agreement
  2. Tenancy agreement sample (English Version) (Chinese Version)
  3. Frequently Asked Questions


Points to note before signing an agreement

If you are thinking of renting a flat or room

DO

  1. Take a friend with you to witness any discussion or negotiation you have with a potential landlord.
  2. Has the agreement recorded in writing? (the landlord may have a standard agreement already typed out) - see appendix II
  3. Insist on taking the landlord's lease agreement away so that you can read it thoroughly.
  4. Pay particular attention to the following points in the agreement:

    . the premises - are they accurately described?
    . the landlord and tenant - are they correctly named?
    . the length of the lease - is this a stated period for which the agreement will run?

    . the rent - is the amount recorded the amount you agreed to? If it is higher insist that it is changed even if the landlord says that he will take the lower agreed figure. This is because the law generally permits a landlord to increase the rent by a certain percentage of the current rent (recorded in the lease) every two years. It should also be clear when and how often you have to pay. Also check whether you have to pay rates, management and other expenses. Tenants are usually liable for water, gas, electricity, management fee and telephone charges. The practice regarding rates varies. [See Question 14 on page 10]

    . the repairs - is it clear what repairs you are responsible and what repairs are the responsibility of the landlord? Usually you should be responsible for only minor defects such as blocked drains; external and major internal repairs are the liability of the landlord.

    . other tenant's duties: read the part of the lease which lists the tenant's duties particularly carefully. It may for instance say that you cannot keep pets, cause a nuisance or sublet. It is also quite common for the tenant to be obliged to allow the landlord in to see the state of the premises. If you agree to such clauses and later break them, even if they are quite trivial matters, you may give the landlord an excuse to make you leave. So do not agree to anything which you cannot honour. Instead tell the landlord you do not want that paragraph in the lease: he may not insist upon it. Make sure any amended clause or paragraph has been initialled by both the landlord and the tenant.

  5. Make sure you are permitted to sublet if you want to share the housing with friends. Make it clear to the Landlord that others will be living there too. He may want one of you to take full responsibility by being the tenant. [There is no danger in this so long as there is no clause in the lease forbidding subletting]. It should be noted that the one who signs the tenancy is responsible for paying the rent and any breaches of the agreement, irrespective of whether other people are permitted to live there. If you do not wish to assume sole liability, make sure that all persons living there sign the agreement. Even so, without an express agreement from the landlord to sublet or part with possession, new members cannot be added as tenants. [See on Question 6 on Questions & Answers Section]

    If there is, see that it is struck out and initialled in the margin.

  6. Guard against `hidden' payments. Be especially careful about whether you are expected to apply a "premium" or "key money", a lump sum in addition to rent whether you are expected to pay the rates and whether there are any maintenance charges or security deposits.
  7. Make sure there is nothing in the agreement saying that the lease is not governed by legislation, particularly the Landlord and Tenant (Consolidation) Ordinance. This legislation gives tenants protection and, though such a clause in the agreement may be inoperative, it is best to be on the safe side.
  8. If the housing is furnished, have a detailed inventory of all the furniture and fittings provided by the landlord and their state of repair. Make two copies and send one to the landlord.

DON'T

  1. Sign anything without reading and understanding it. If there is anything you don't understand, bring it to Centre of Development and Resources for Students (CEDARS) before you sign.
  2. Rely solely on the landlord's oral assurances: to safeguard your position everything must be in writing.
  3. Forget to ask the landlord whether he owns the premises: he may himself rent them from somebody else and, if he does this could affect the legal position.

Frequently Asked Questions

Q.1 Is it true that if someone under the age of 18 signs a tenancy agreement that contract will not be recognized by law?

A. A person who has not attained the age of 18 is regarded as a minor in law. An agreement signed by a minor is generally voidable at the minor's option. As a tenant, a minor may declare that he will not honour the tenancy agreement and will not pay rent at any time before he becomes 18 and within a reasonable time after than. If he chooses to do so, he has to leave the premises. But there is an exception to this general rule. A minor could not avoid a tenancy agreement if such an agreement is a necessary (not the same as necessity) or when it is generally for the minor's benefit. It is arguable that a residential tenancy falls within such a category.

Q.2 Is it safe for a tenant to sign a contract with an agent of a landlord?

A. Yes, provided the agent is really the landlord's representative. The landlord will be bound just as if he himself had signed the agreement. This will be so even if the agent was in fact acting beyond his instructions in signing on the landlord's behalf, so long as the landlord really did give the agent some limited authority to act for him. You have to have some reasonable basis to believe that the agent acts with the landlord's authority, e.g. possession of keys to the premises or showing you around in the presence of the landlord. The mere fact that the agent said he/she represents the landlord is insufficient.

Q.3 How can a potential tenant find out whether the person with whom he/she is about to sign the contract is the true landlord or the agent of a landlord rather than an unrelated person?

A. He can ask to see proof that the person he is dealing with has power to grant a lease of the premises and should refuse to sign or pay rent until proof is given. Such proof could be a copy of the Land Office document registering the premises in the landlord's name (if the landlord owns the premises) or a copy of the lease under which the landlord holds the land (if the landlord is himself the tenant of a head-landlord: that lease should of course be for a longer period than the lease offered to the potential tenant). If the `landlord' or `agent' proved to be a fraud with no right to let out the premises, the potential tenant who has signed the agreement and made payments in advance would be able to sue for breach of contract, but it is not unreasonable to assume that culprits would have vanished.


Q.4 When signing a contract, is there anything one should do to make the contract legally recognised?

A. The law requires all leases of over three years to be in writing. Shorter leases do not have to be in writing but if they are not there may be trouble proving precisely what was agreed. It is always desirable to have the tenancy agreement in written form. Such written tenancy agreement should at least identify the landlord and tenant, the premises, the commencement and duration of the lease and the rent. Leases for longer than three years should also be registered at the Land Office (to protect the tenant against the landlord's trying to lease the same premises to someone else) and should be stamped to indicate that Stamp Duty has been paid. An unstamped lease is not admissible in evidence in court.

Q.5 Can you give some examples of clauses in a lease or contract that would not be legally recognized?

A. Probably the most common legally ineffective clause is one which declares that the Landlord and Tenant (Consolidation) Ordinance does not apply to it, that the tenant waives any statutory rights he may have and so forth. These amount to no more than an attempt to bully the tenant into not seeking the benefit of the rent and tenure controls. The Ordinance, not the parties to the lease, decide when the Ordinance is to apply: statute always over-rides contract. Sometimes it is possible to contract out of the controls, but only by following a procedure laid down in the Ordinance, which is designed to ensure that the tenant really understands what he has agreed to. Other illegal clauses include those requiring the tenant to use the premises to commit a crime or civil wrong or to promote immorality (gambling, prostitution), those declaring that the courts shall have no jurisdiction over disputes between the landlord and the tenant and those providing that the tenant shall be liable for an extortionate amount of damages as a penalty for breaking the agreement.

Q.6 A student wishes to share a flat with a group of friends. Can he sign the contract with the landlord? What if the landlord accuses him of subletting?

A. As a matter of convenience, it is preferable for one student to be the tenant and to sign the lease, rather than for all the students to become joint tenants. That way, if one or more of the students decides to leave, there is no need to notify the landlord. The student who signs the lease is solely responsible for any breaches of it, even if he ceases to live in the premises before the lease expires, so he should be aware of the obligations he is entering into. He should read the lease carefully and pay particular attention to whether there is a clause forbidding him from subletting. If there is no such clause, the law permits him to sublet. If there is, he should explain to the landlord that he intends to share, obtain the landlord's consent and ask that the clause be removed before he signs. Should the landlord refuse and the student still wish to go ahead with the transaction, there may be a way in which he can share the premises with his friends. Instead of subletting (i.e. giving others exclusive possession of part of the premises) he could grant them a licence, which is merely permission to use the premises. It is, however, not always easy to decide whether an arrangement to share is a sublease or a licence. If the tenant has access to all parts of the premises at all times and makes it clear to his flatmates that he is giving them permission to use the place but not exclusive occupation, he is able to claim he is merely granting them licences. If members of the group of sharers (other than the tenant) change from time-to-time that will not matter because it will tend to strengthen the argument that the tenant has granted them mere licences. However, it is risky to rely on a licence agreement, especially if the students occupy different rooms.

Q.7 If the lease is for, say, two years and the tenant leaves before that time is up, can the landlord claim compensation from the tenant, e.g. by not refunding the security deposit?

A. Yes. The tenant has agreed to a two-year term and to pay rent for two years. The landlord is entitled to that amount of rent and can sue for the balance if he is not paid. Whether he is entitled to take that balance out of the security deposit depends on what that deposit is security for - if it includes security for non-payment of rent, he can do so. If it is security for replacement of or repairs to furniture, fittings etc. then he should not do so. However, since the tenant does owe him money and if the deposit covers the debt, he would likely as a matter of practice deduct the debt from the deposit rather than starting a court action for arrears of rent.

Q.8 When can the landlord terminate the contract before the agreed period?

A. Whenever the tenant commits a breach of covenant which entitles the landlord to forfeit the lease. This will vary from lease to lease, but generally any major breach of the tenants' obligations will entitle the landlord to start proceedings for possession. The tenant will, however, have a chance to apply for `relief against forfeiture' if he can put his breach right and reimburse the landlord his costs. The commonest breach giving rise to forfeiture is non-payment of rent. Other covenants breach of which frequently give rise to forfeiture include: to repair, not to assign or sublet, and not to use the premises for particular purposes (e.g. business).

Q.9 If the landlord sells the property to another landlord, can the tenants stay under the terms of the previous agreement?

A. Yes. The new landlord simply replaces the old one, so he is bound by the terms of the lease and the tenant must now pay rent to him.

Q.10 What are the conditions and procedure for renewal and rent increases?

A. Most of the domestic tenancies in Hong Kong are regulated by Part IV of the Landlord and Tenant (Consolidation) Ordinance. When the terms of the tenancy agreement have expired, it is open to the parties to renegotiate all the terms of the tenancy agreement. If the tenant decides to stay but the landlord refuses to renew the tenancy, the tenant can apply to the Lands Tribunal for a new tenancy. The Tribunal will grant the new tenancy unless it is satisfied that the landlord should recover possession on some statutory grounds including self-use and redevelopment. The rent for the new tenancy, if not agreed, will be prevailing market rent to be determined by the Tribunal. The procedure for applying to the Lands Tribunal, though not complicated, warrants understanding of details. Students are advised to refer to the handbook titled A Guide to the Landlord and Tenant (Consolidation) Ordinance published by the Rating and Valuation Department. (also available on their website http://www.info.gov.hk/rvd)

Q.11 How can tenants prove that they have paid rent and how much they have paid?

A. The tenants should insist on accurate and immediate receipts when they pay in cash. If they pay by cheque they should retain the cheque counterfoil and bank statement showing the cheque has been drawn. Proof of payment is of course a matter of evidence and documentary evidence is useful, but so too is eye-witness evidence, so tenants can further safeguard their position by ensuring that the cash is handed over, or cheque written and posted, in the presence of witnesses. If the tenant wishes to prove that he has attempted to pay but payment was refused, he should keep documents and take witnesses and he can send payment to the landlord's address by registered post. It is always advisable to pay through bank by a cheque.

Q.12 What about payments other than the rent that is contained in the agreement?

A. Payments other than rent, like rates, management fee and utilities, could be shouldered by either the landlord or the tenant. It is advisable to spell out explicitly in the tenancy agreement as to what payments falling on which party.

Q.13 Is the tenant entitled to the return of his security deposit if he decides not to rent the housing n after discussion with the landlord and/or potential flatmates?

A. This depends on what stage has been reached and on what the deposit is meant to cover. If the lease has been signed by the tenant he is legally obliged to pay rent, which presumably would be a larger sum than the security deposit. If he is still negotiating with the landlord, no agreement has been reached and he can change his mind about taking the premises. In those circumstances he would be foolish to have paid any deposit. However, if he has, he will be entitled to its return if the deposit covers non-payment of rent, damage to furniture and fittings and other matters associated with the tenant's occupation. The deposit may be expressed to constitute a guarantee by the potential tenant that he will enter into the lease. In this case, since the tenant has broken the guarantee, he cannot recover the payment.

Q.14 What is the tenant's responsibility in respect of the maintenance and repair of the housing?

A. This depends on the terms of the lease. The tenant's responsibility usually increases with the length of the tenancy; it is not uncommon for him to be liable for internal (but not external) repairs. Usually the lease also stimulates that he must allow the landlord to enter and inspect the state of repair. If the agreement says nothing about maintenance and repair, the tenant must use the premises in a "tenant-like manner". This means he should perform small jobs such as mending fuses, stopping drains and cleaning windows.

Privately-rented Housing - Guidelines and FAQs