HK lawmakers pass tenancy control bill to protect poorest from landlord exploitation

21-Oct-2021 Intellasia | South China Morning Post | 5:02 AM Print This Post

Hong Kong lawmakers have moved to protect some of the city’s poorest from being exploited by unscrupulous landlords by passing a bill that caps rent increases for subdivided flats.

The law, which comes into effect in January next year, covers about 110,000 flats and limits rent rises to no more than 10 per cent per lease period, which is set at two years.

Legislators voted 37 to zero, with two abstentions, in favour of the Landlord and Tenant (Consolidation) (Amendment) Bill 2021 on Wednesday.

Secretary for Transport and Housing Frank Chan Fan lauded the bill as providing reasonable and effective protection for subdivided flat tenants without overly infringing on the interests of landlords. He also acknowledged calls to bring down the baseline rents of subdivided flats, but insisted it was not feasible to introduce such a measure for the time being.

“Subdivided flats have different characteristics and these should be taken into account when deciding on initial rents,” Chan said. “Before rental data on the subdivided flat market is available, the administration considers it infeasible at this stage to formulate an objective and reasonable mechanism to fairly determine initial rent.”

Subdivided homes are notoriously small and many are located in rundown buildings owned by individuals or companies.

Tens of thousands of families have to resort to living in the cramped flats, which are often poorly maintained, during their long wait for public housing.

Rent varies widely, and a 100 sq ft space with a bathroom can cost about HK$4,000 to HK$5,000 (US$516 to $645) per month.

Under the new law, tenants and landlords of subdivided flats will have to sign a standard tenancy agreement which sets out the rent amount, a deposit, utility charges and fees for any breach of agreement, and nothing else.

Landlords overcharging for water and electricity will face fines of at least HK$10,000.

The lease will be fixed for two years, and upon expiry the tenant has priority to renew it for another two years, with the rent subject to control.

Landlords must follow a rent-regulation mechanism, which adopts the Rating and Valuation Department’s index reflecting rent levels of private residential properties.

The rate of increase is capped at either the annual percentage change in the index or 10 per cent, whichever is lower. The government previously amended the bill to lower the figure from 15 per cent under pressure from lawmakers.

After four years, the landlord and the tenant are free to negotiate a new agreement with no cap on the rent increase. The government will not set a maximum rent or ban existing substandard dwellings.

Hong Kong is the world’s least affordable residential property market, and Beijing has called the city’s housing shortage a deep-seated problem that must be addressed.

The director of the State Council’s Hong Kong and Macau Affairs Office, Xia Baolong, set a target in July for the city to “bid farewell” to subdivided flats and so-called cage homes by 2049.

The average waiting time for public housing has climbed to 5.8 years, the longest in more than two decades, with more than 153,000 families in the queue.

https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3153049/hong-kong-lawmakers-pass-tenancy-control-bill

 

Category: Hong Kong

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