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Common Tenancy Terms and Conditions

 
Q. What are the common terms used in a tenancy?
A. Please click the link for a list of terms - Leasing Terminology Glossary
 
Q. What is commonly found in a tenancy agreement?
A. Please click the following link for document - Leasing Summary Sample
 
Q. How long should my lease run for?
A. The general term in Hong Kong is for 2 years and subject to negotiations, a 2 or 3 month written notice may be served to the landlord to early terminate the lease if the tenancy contains a “break-clause”.  We strongly advise you to include a break-clause in the tenancy agreement.
 
Q. What is a break-clause?
A . A break-clause is a provision in a lease which allows a tenant to obtain early termination of the tenancy at a pre-determined date by prior notice. The most common break clause for a 2 year lease is 12 months plus two months (notice).  Most break clauses are subject to negotiation.
 
Q. What is the difference between a diplomatic and an unconditional break clause?
A . A diplomatic break clause is only exercisable when the tenant is leaving Hong Kong for not less than six months or leaving employment of the company. An unconditional break clause is a straightforward break that can be exercised without reason. Most landlords will accept an unconditional break clause.
 
Q. Why should I avoid signing a “legally binding” offer letter before reviewing the formal tenancy agreement?
A. A “legally binding” offer letter eliminates your right to amend the formal tenancy agreement. This document can at times be more favorable to the landlord than the tenant and offers more protection to the landlord. For example, in the event that you and the landlord cannot come to an agreement on the terms and conditions in the formal tenancy agreement, you will still be liable for the terms stated in your binding signed offer letter. If you have signed a legally binding offer letter and decide that you do not want to move into the property for whatever reason, you may have to compensate the landlord for any loss, including having to pay two years worth of rent if the landlord cannot or refuses to find a replacement tenant within the tenancy term of two years. You may also be liable for the real estate agency fee even though you did not eventually sign a formal tenancy agreement.
 
Q. What is meant by a ‘standard’ tenancy agreement?
A . For developments which are wholly owned by a corporate landlord (single ownership), the landlord will use their own standard tenancy agreement, i.e. the same TA for the entire building and will usually accept only minor changes to the terms and conditions. Occasionally individual landlords use the government produced TA, which covers very basic tenancy terms and is not recommended for use.
 
Q. Can I renew my lease upon lease expiry?
A. With the new Landlord and Tenant Ordinance, any tenancy which commenced on or after 9th July 2004 will come to an end by effluxion of time. Upon the lease expiry, the Landlord can take back the premises if he wishes and you will not have the right to apply to Lands Tribunal (i.e. the judicial forum for land disputes in Hong Kong) to request for a new tenancy even if you are willing to pay market rent. Under this new law, both the Landlord and you are free to negotiate terms for lease renewal. However, if no agreement can be reached, you have no recourse and must move out from the premises upon the lease expiry date. A summary guide prepared by Rating and Valuation Department can be found at: http://www.info.gov.hk/rvd/public/SummaryGuide-e.pd
 
Q. Who is responsible for the reinstatement of the premises upon the termination of the tenancy?
A. All tenancy agreements state that when the tenant moves out of a property, it should be in the same condition as it was at the commencement of the tenancy. Fair wear and tear is excepted. At the initial handover a Savills tenancy management representative will inventory all existing defects at the property. At the end of the tenancy, all costs associated with any additional reinstatement work, which is necessary as a result of alterations, which were made or caused by you during your occupancy, will have to be rectified prior to the handing over of the premises back to the landlord. Examples of such defects are:
  • Removal of picture hooks and filling in holes on walls
  • Removal of curtain rails so installed by you
  • Any additional wiring installed or sockets moved for internet, cable or satellite TV wiring
  • The re-painting of walls of the premises back to the original colour
  • The erection or removal of partitions or walls
  • The removal of carpets
  • The removal of external structures, e.g. awnings
  • Stains, burns or marks on carpet(s) which cannot be removed by professional cleaning
  • Stains or marks on wallpaper/paintwork which cannot be removed by professional cleaning
  • Pins, hooks or the like onto wall tiles
  • Malfunction of appliances due to neglect
  • Damage caused by pets
  • The removal of additional fitted wardrobes
All your own furniture and personal belongings will need to be removed from the property prior to the property being handed back to the landlord. If any such defects or any other damage you have made to the property are not rectified by the time of lease handover, you will be entirely responsible for reimbursement of reinstatement costs to the landlord.
 
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