I want to rent a residential property

A tenancy agreement is usually signed in duplicate and kept by the landlord and tenant respectively when the stamp duty has been paid. In addition, both parties should ask the estate agent to provide copies of all documents he had signed with the agent.

The tenancy agreement is a legal document. Once it is signed, any amendment should be agreed by all contracting parties and cannot be amended unilaterally.

Generally, the landlord will require the tenant to pay one to three months’ rent as a security deposit. Unless the landlord has agreed beforehand, the security deposit cannot be used to offset rental payments. Upon termination of the tenancy agreement, the landlord is entitled to deduct from the security deposit the amount of rent and fees in arrears. Tenants should note that when paying security deposits and/or the first instalment, it is best to pay directly to the landlord/lessor (or by cheque/bankdraft payable to the landlord) and immediately request and retain a receipt as proof.

Consumers should pay the commission to their agent according to the agreement between the consumers and the agent and the terms specified in the prescribed Estate Agency Agreement: namely, upon signing of the agreement for sale and purchase or upon completion of the transaction in a sale and purchase situation; or upon signing of the lease or commencement of the tenancy as specified in the binding lease in a leasing situation. However, the client shall have no obligation to pay any commission to the agent if completion of the property transaction/commencement of a binding lease falls through without fault on the part of the client. The commission shall become payable to the agent in the case of mutual cancellation of a binding agreement for sale and purchase/binding lease of the concerned property between the vendor and purchaser/landlord and tenant not arising from any provisions of the agreement for sale and purchase/lease.

If the term of tenancy exceeds three years, a lease is required in accordance with the Conveyancing and Property Ordinance and it has to be created by a deed and the formal procedure for execution of a deed must be followed. Moreover, the lease has to be registered at the Land Registry in accordance with the Land Registration Ordinance. After the lease has been registered, the rights of the lessee will be protected. If the lessor sells the property, the lessee will be able to enforce the lease against the new owner. If the tenancy agreement contains a clause giving the tenant the option to renew upon its expiry, the tenancy agreement should also be registered at the Land Registry for protection.

According to the Stamp Duty Ordinance, stamp duty is payable on a tenancy agreement or lease of residential properties. The amount of the stamp duty payable depends on the prevailing rates of stamp duty, the term of the lease and the rent payable by the tenant under the lease. Generally speaking, the total stamp duty payable is borne by the landlord and the tenant in equal shares.

The landlord must file Form CR 109 at the Rating and Valuation Department. Form CR 109 can be completed by the landlord or his representative and contains information such as the names of the parties to the tenancy agreement or lease, tenancy term, rental, the party who will bear and pay the rates and the management fees. The Form has to be filed within one month of the execution of the tenancy agreement or lease. Otherwise, a penalty of $310 will have to be paid for late filing. Failure to file Form CR 109 will render the landlord unable to take legal action for recovery of the rent in court/Lands Tribunal.