Moving to a vibrant city like Hong Kong is an exhilarating experience, but navigating the rental market can feel like a complex puzzle. At the heart of this process lies the tenancy agreement—a legally binding document that will govern your new life as a tenant. While a Midland Realty agent will be your trusted guide through every step, understanding the key components of this agreement is crucial for a smooth and secure tenancy.

This guide, a cornerstone of our “Expat Renting in Hong Kong” series, will decode the standard Hong Kong tenancy agreement, empowering you to sign with confidence.

The Foundation: Lease Term and the Break Clause

The standard lease term in Hong Kong is typically two years. This might seem like a long commitment, especially for those new to the city. However, most agreements contain a crucial element of flexibility: the “break clause.”

This clause usually allows either the tenant or the landlord to terminate the lease prematurely, typically after the first 12 months have passed. To exercise this option, you are generally required to provide 2-3 months’ written notice to the other party. This “1-year fixed, 1-year optional” structure offers a balance, locking in your rental rate for two years while still providing an exit strategy if your circumstances change.

Your Financial Commitments: Rent, Deposit, and Other Upfront Costs

Before you get the keys to your new home, you’ll need to be prepared for a few significant upfront payments:

• Security Deposit: It is standard practice in Hong Kong for landlords to require a security deposit equivalent to two months’ rent. This deposit is held by the landlord as security against any damages to the property or unpaid rent.
• Advance Rent: In addition to the deposit, you will typically need to pay the first month’s rent in advance.
• Agency Fee: If you use a real estate agent to find your property, a commission is usually payable. This fee is typically half of one month’s rent.

Therefore, you should budget for a total initial outlay of around three and a half months’ rent.

Defining Responsibilities: Repairs and Maintenance

The tenancy agreement will clearly outline the responsibilities of both the landlord and the tenant when it comes to maintaining the property.

Landlord’s Responsibilities: Generally, the landlord is responsible for the structural integrity of the building and the maintenance of essential services. This includes repairs to things like plumbing, drainage, and electrical wiring. They are also typically responsible for the upkeep of fixtures and appliances that they provide.

Tenant’s Responsibilities: As a tenant, you are expected to keep the interior of the property in a good, clean, and tenantable condition, allowing for what is known as “fair wear and tear.” This means you are responsible for minor day-to-day upkeep. It is also your duty to use the property in a reasonable manner and not to cause any damage. Many buildings in Hong Kong are also governed by a Deed of Mutual Covenant (DMC), which sets out rules for all residents. Your tenancy agreement will require you to comply with the terms of the DMC.

The Importance of Writing: Special Terms and Verbal Agreements

Have you negotiated a rent-free period to allow for moving in? Or has the landlord given you permission to keep a pet? Any verbal agreements made between you and the landlord must be explicitly written into the tenancy agreement to be legally enforceable. Do not rely on verbal promises, as they can be difficult to prove in the event of a dispute.

Template for Tenancy Agreement

Making it Official: Stamping and Legal Enforceability

For a tenancy agreement to be legally binding and admissible in a Hong Kong court, it must be “stamped” by the Inland Revenue Department’s Stamp Office. This process involves paying a stamp duty, the cost of which is calculated based on the rental amount and the length of the lease. The cost of this stamp duty is typically shared equally between the landlord and the tenant. The agreement should be stamped within 30 days of being signed.

Key Considerations for Expats

• Verify the Landlord: Before signing any documents or handing over money, it is wise to conduct a land search at the Land Registry to verify the true owner of the property. This helps protect you from potential rental scams.
• Utilities and Other Charges: Clarify whether the rent includes management fees, government rates, and utilities. Often, these are additional costs that the tenant is responsible for.
• Proof of Employment: Don’t be surprised if a landlord asks for proof of your employment in Hong Kong to ensure you have a stable income to cover the rent.

FAQ：Hong Kong Tenancy Agreement

What is the tenancy law in Hong Kong?

The primary legislation governing tenancies in Hong Kong is the Landlord and Tenant (Consolidation) Ordinance (Cap. 7). This ordinance, along with principles from common law, establishes the legal framework for the rights and obligations of both landlords and tenants.

Key aspects of the law include:

• Freedom of Contract: Landlords and tenants are generally free to agree on the terms of the tenancy, provided they do not violate the Ordinance.
• Termination: For tenancies created after July 9, 2004, termination is handled according to the terms specified in the agreement, such as at the end of a fixed term or by exercising a break clause. The previous statutory right for tenants to renew at market rates (security of tenure) was removed for tenancies created after this date.
• Implied Duties: The law implies certain duties even if they are not written in the agreement. For tenants, this includes paying rent on the due date and not causing unnecessary disturbance. If rent is not paid within 15 days of the due date, the law implies a right for the landlord to forfeit the tenancy.
• Regulated Tenancies for Subdivided Units (SDUs): The Landlord and Tenant (Consolidation) (Amendment) Ordinance 2021, which took effect in January 2022, introduced specific protections for tenants of subdivided units. This includes a mandatory four-year tenancy cycle (two consecutive two-year terms), limits on rent increases for the second term, and requirements for landlords to submit a Notice of Tenancy to the Rating and Valuation Department.

What is the most common tenancy agreement?

In Hong Kong, the most common type of residential tenancy agreement is a fixed-term tenancy, typically for a period of two years. This agreement often includes a “break clause,” which allows either the landlord or tenant to terminate the agreement after the first year by giving a specified amount of notice, usually two to three months. This structure provides the stability of a two-year rental period while offering flexibility.

These agreements are distinct from periodic tenancies (e.g., month-to-month), which automatically renew until one party gives notice to quit.

What is the difference between a lease and a tenancy agreement?

While often used interchangeably in casual conversation, in a legal context, there is a technical difference between a “lease” and a “tenancy agreement” in Hong Kong, primarily related to the duration of the tenancy.

• Tenancy Agreement: This term typically refers to an agreement creating a tenancy for a period not exceeding three years. It can be made in writing or even verbally, though a written agreement is always recommended.
• Lease: This term refers to an agreement creating a tenancy for a period longer than three years. A lease must be created as a “deed,” which is a more formal legal document that must be signed, sealed, and delivered. Crucially, a lease for more than three years must be registered with the Land Registry to protect the tenant’s interest against third parties, such as a new owner if the property is sold.

For the vast majority of residential renters in Hong Kong, who are on two-year contracts, they will be signing a tenancy agreement.

How to get a tenancy agreement stamped in Hong Kong?

Stamping a tenancy agreement is a mandatory legal requirement in Hong Kong to make it legally enforceable in court. An unstamped agreement cannot be used as evidence in civil proceedings. The process must be completed within 30 days of the agreement’s execution (signing).

There are three main ways to get a tenancy agreement stamped by the Inland Revenue Department’s (IRD) Stamp Office:

1. Online (e-Stamping): This is the most convenient method and is available 24/7 through the GovHK website. You input the tenancy details, pay the stamp duty online via credit card, FPS, or PPS, and then print a stamp certificate to attach to the agreement. You do not need to submit the original document.
2. By Post: You can fill out an application form (IRSD111) and mail it with a cheque for the stamp duty amount to the Stamp Office. The Stamp Office will then mail the stamp certificate to you.
3. In Person: You can visit the Stamp Office in person and present the original tenancy agreement for stamping over the counter. Payment can be made by cash or cheque. It is possible to book an appointment online beforehand.

The cost of the stamp duty depends on the term of the tenancy and the annual rent. This cost is typically shared equally between the landlord and the tenant.

Navigating the Hong Kong rental market is a significant part of your relocation journey. By understanding the key elements of your tenancy agreement, you can ensure a secure and positive living experience in this dynamic city. Always remember to read the contract thoroughly, and never hesitate to ask your Midland Realty agent to clarify any points you are unsure about.