Hong Kong Orientation Guide

Hand-over

Keystotheflatarenormallygiventothetenantthedaytheleasebegins,andthisiscalledthe“hand- over.”Sometimeskeysaregiventothetenantaftertheleasehasbeensigned,afewdaysbeforethe commencementofthelease.Anyproblemsordefectsatthepremisesshouldbedocumentedand reported to the landlord as soon as possible. The importance of this cannot be overemphasized.

Handling Fees

The industry standard for agents’ handling fees in Hong Kong, recommended by the Institute of Chartered Surveyors, is half of one month’s rental.

Duration of Term

A lease or tenancy agreement between the landlord and the tenant usually has a termof two years. Landlords usually grant a “break clause” option that allows the tenant, under carefully defined circumstances,togive the landlordanearlynoticeoftermination.Undera typicalbreak clause,thetenantispermittedafteroneyeartogiveatwoorthreemonth’swrittennoticeof intent to the landlord to terminate the lease agreement without any penalty. Another type of break clausethatisbecomingmorepopular withlandlords isthe“diplomatic”break clause.Thisdiffers fromthestandardbreak clause in that the tenantcannotgivenotice to terminate theagreement unless he is leaving the employment of his employer or relocating out of Hong Kong. Shouldanearlyterminationofyourleasebe required,the landlord’sprioragreement mustbe obtained. The Tenancy Agreement is legally contractual agreement and your non-performance of your duties could quite possibly be enforced in a court of law.There is no industry standard forpenalties chargedforearlytermination,asthe landlordwilltypicallyholdthe tenantliablefor the full termof the contract up to the earliest possible termination date.If you stop paying your rent,the landlordmay consider you in breach of your lease and this non-performance of your contractual obligations couldquite possiblyprovide the landlordwitha reason to tryand forfeit your security deposit. The landlord might seek forfeiture of the security deposit over and above the rental sought for the contractual period of the lease. The landlord may also engage a solicitor to try and sue for damages (unpaid rent). There is no industry standard for penalties charged for early termination,as the landlord will typically hold the tenant liable for the full termof the contract up to the earliest possible termination date. The notice to terminate your lease should be served in strict accordance with what is outlined in your Tenancy Agreement; this might include having to serve the notice by registered mail or in person, or only at the end of a calendar month.This will be clearly stipulated in your TenancyAgreement. Early Termination

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