Key Terms and Useful Information
Lease or Tenancy
Usually a two year period: a legally binding contract between a Tenant and a Landlord. There may be an option to renew for another year at the market rental or mutually agreed rental. A Tenancy may offer a Break Clause, meaning that the Tenant may give notice to quit. A Break Clause generally comes into effect after a period of twelve months, with two to three months written notice given by the tenant to the Landlord (or an equivalent amount of money in lieu of notice). A Diplomatic Break Clause allows the tenant to give notice with two to three months written notice, sometimes within the first twelve-month period, but requires proof that the tenant is relocating out of Hong Kong or ceases to be in the Tenant's (Company's) employ.
Furnishings and Appliances
Partly-furnished properties will have fittings, major kitchen appliances and air-conditioning units pre-installed. If you are not shipping your furniture, fully-furnished properties are available and high quality furniture may be leased.
The Tenant is the Company or the individual who signs the tenancy agreement and whose name appears at the top of the Tenancy Agreement or Lease. If it is the Company that appears at the top of the Tenancy Agreement, then the employee of said Company is known as the occupant.
A Landlord may either be a major developer, an investment company or an individual.
An amount paid monthly throughout a Lease Term. This amount will be pre-negotiated before the Tenancy Agreement is signed and will remain constant through the Lease Term. The rent is generally exclusive of Management Fees and Government Rates.
Paid on a monthly basis, in addition to the Rent. Management Fees cover the cost of the management staff, security personnel, and the general upkeep of all communal areas of any development or building.
A Property Tax, usually paid by the tenant directly to the Government on a quarterly basis in advance. Divided monthly, the figure is approximately four per cent of the Rent.
Paid by the Landlord, directly to the Government. Owing to the fact that there is but one Freehold in Hong Kong (St. John's Cathedral), owners of developments of individual apartments pay a land fee to the Government. On new Government Leases, Government rent is sometimes charged to the tenant.
A levy paid to the Government, upon the signing of the Tenancy Agreement on a two year lease. Equivalent to 0.5% of the annual rent - this figure is equally divided and paid by the Tenant and the Landlord.
A fee, paid "Subject to Contract", to the Landlord's solicitor. Generally equivalent to one month's rental and payable upon the acceptance of the offer, prior to receiving a copy of the Tenancy Agreement. Upon signing of the formal tenancy agreement, the Holding Deposit, in most cases becomes the first month's rent. If negotiations break down prior to the signing of the formal Tenancy Agreement, the Holding Deposit is usually refunded in full.
Equivalent to two months' rent (and on occasion two months' Management Fees and two months' Government Rates) paid to the Landlord upon the signing of the formal Tenancy Agreement. If the lease is to be a personal one, a Landlord may ask for three months rent as security deposit. This deposit is held by the Landlord, with no interest paid, and is refunded at the end of the Lease. Terms upon which the Security Deposit is returned should be clearly stated in the Tenancy Agreement.
The agency commission is equal to 50% of one month's rent, and is paid by both the Landlord and the Tenant.
Each Party bears their own respective legal costs. The Tenancy Agreement is prepared in most cases by the Landlord's solicitor.
Last Updated: 4 March, 2003