Hong Kong Orientation Guide

Rent – Government Rates and Management Fees

The monthly rental amount is agreed to as part of the negotiation process. Unless specifically stated otherwise, rent is “exclusive” of building management fees and government rates. Landlords usually request that rent payment be made via “autopay”—automatic direct debit paid directly into the landlord’s bank account.

Management Fees

Management fees cover buildingmaintenance costs,upkeep and landscaping of communal areas,security,dailyhouseholdtrashremovalandamenities.Thefeeforeachunitisdependent upon several factors,most importantly the age of the development, and the gross area of the particular flat. Facilities such as swimming pools, tennis courts and shuttle buses obviously inflate the management fee, but sometimes these facilities are charged independently. Asageneralguide,managementfeesareequalto5-10%ofthemonthlyrental.Mostbuildings are maintained by property management firms who, in turn, charge the owners. The amount is fairly stable over several years, but is subject to increases whenever the owners’ committee determines this is warranted.

Government Rates

In Hong Kong, there are two types of rates: general rates and Urban Council rates, with both appearing on the same demand note.The proceeds from the first go to general government revenue, while the proceeds from the second go to the Urban Council to help finance the facilities thatitprovides.Theamountisusually5%oftheannualrentalamount,andasexpected,is subjectto revision by theRatingandValuationDepartment. Ratesare chargedquarterly and payable in advance. There is a 5% surcharge if payment is late.

Utilities

Typically,monthlyutilitychargesarepaiddirectlybythetenant.Utilities includegas,electricity and telephone. Water consumption is billed quarterly, and is also the responsibility of the tenant. Some landlords insist that these accounts remain in their name. Deposits are required for utility connections.Arrangements for connection of utilities are generally the responsibility of the incoming tenant. We can arrange utilities to be connected for all our clients.

Stamp Duty

StampDutyis a tax that isapplied to a lease.Itis shared equallybetween the landlordand the tenant. The current rates depend on the length of the lease, and are as follows:

+ One year or less, or if the term is unspecified: 0.25% of the total annual rental. + One year or more, but less than three years: 0.5% of the total annual rental. + Three years or longer: 1% of the total annual rental.

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