Before signing any tenancy agreement, it is in the best interests of both the landlord as well as the tenant to have the required information that will help them to protect their individual interests in the deal. Here is our Top Tips When Signing Hong Kong Tenancy Agreements.
This will help to prevent misunderstandings and disputes between the two parties at a later date. Here is Qi-Homes’ Top Tips for Landlords and Tenants when signing Hong Kong Tenancy Agreements, what to look for and when to seek legal advice.
For the Attention of the Landlord
Before signing any tenancy agreement, it is important for the landlord to have a basic idea about the financial background of the tenant and whether he/she will be able to afford the monthly rental payments.
The landlord or his agent should make an attempt to gather evidence with regards the financial capacity of the tenant to pay the rent.
The landlord may ask occupational details such as employment letter or reference letter from his company human resources.
According to Hong Kong Data Privacy Laws, the landlord may ask to see the employment contract showing monthly salary or bank details, but cannot keep a copy and must be returned to the tenant.
For the Attention of the Tenant
The tenant, on his/her part, should make inquiries with the Land Registry to find out if the property is mortgaged by any bank. If so, the tenant should additionally clarify if the bank has agreed to letting out the premises on rent. (Called BANK CONSENT)
Without prior approval from the bank the owner cannot rent out the mortgaged property without some liability to the tenant. If they do not pay the mortgage amount to the bank, the bank will take possession of the property and may even choose to evict the tenant.
The tenant also stands the risk of losing the deposit amount paid for the rental property. Qi-Homes recommends signing a LETTER OF INDEMNITY AND UNDERTAKING that clearly indemnifies the tenant against costs and expenses, liabilities, losses, damages, actions, proceedings and claims whatsoever.
With regards the tenancy agreement, it should clearly contain the following aspects as far the term of the lease is concerned:
- The amount of rental, price agreed by both parties.
- The term period of the tenancy, with clear starting and ending dates.
- Inclusions/Exclusions if any extras: parking space, management fees, government rent/rates, etc.
- The person responsible for the payment of inclusions/ exclusions during rent free period, if any (before which the rent has to be paid)
- Method of payment of the rent: check, bank transfer, auto pay etc.
- Penalties that may be added on non-payment of rent on time.
- Option for the tenant to renew the tenancy agreement after expiry of the agreement (whether available or not)
- A break clause or a window period after which either party (landlord or tenant) can terminate the tenancy agreement. This is typically after the 12th Month thereafter each party having the option to give one or two months notice to vacate.
Special terms can be added to the tenancy agreement regarding the tenants’ responsibilities with regards the expenditure to be borne for the repairs that may happen in the premises. It is important that the tenant completely understands the liabilities and responsibilities attached to the agreement (as regards structural repairs, etc.).
The landlord will also require the tenant to take out indemnity insurance and forbid him/her from sub-letting the property.
When in doubt it is important that the tenant gets a lawyer to check the clauses of the tenancy agreement before putting his/her signature on the document. If the lawyer is shared with the landlord, the fees can also be shared.
Registration of Tenancy Agreement in Hong Kong Once the tenancy agreement has been signed, two copies of the contract are to be sent to the Inland Revenue Department for official registration. The registered copies are then sent back to the landlord and tenant.
The stamp duty fee charged by the government is usually shared between the tenant and the landlord.
Qi-Homes uses a legally prepared tenancy agreement template that has been approved by major banks and financial institutions in Hong Kong. For more information about letting your property or if you are looking for that perfect home, please contact us today. Contact us HERE