a) Objective and Scope of Application of Landlord and Tenant (Consolidation) (Amendment) Ordinance 2021

a) Objective and Scope of Application of Landlord and Tenant (Consolidation) (Amendment) Ordinance 2021

a. Objective:

Part IVA of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) came into effect on 22 January 2022 to regulate tenancies of subdivided units.

The key requirements under the Ordinance are as follows:

1. a regulated cycle of tenancies for a subdivided unit is to comprise two consecutive regulated tenancies, each for a term of two years;
2. a tenant of a first term tenancy for a subdivided unit is entitled to be granted a second term tenancy of the regulated cycle, thus enjoying security of tenure of four years;
3. rent increase during the term of a regulated tenancy is not allowed;
4. the rate of rent increase for the second term tenancy of a regulated cycle must not exceed the percentage change of the territory-wide rental index for all classes of private domestic properties compiled and published by the Rating and Valuation Department (“RVD”) during the relevant period, and is capped at 10 per cent;
5. a landlord of a regulated tenancy commits an offence if the landlord requires the tenant to pay any non-permitted money or reimbursement of charges for specified utilities and services (including water and electricity); and
6. a landlord of a regulated tenancy must, within 60 days after the term of the tenancy commences, submit a Notice of Tenancy (Form AR2) to the RVD. If the landlord, without reasonable excuse, fails to comply with the requirement, the landlord commits an offence.

b. Scope of Application:

A tenancy which fulfils all of the following conditions is a “regulated tenancy” under Part IVA of the Ordinance:

1. the tenancy commences on or after 22 January 2022;
2. the tenancy is a domestic tenancy;
3. the subject premises of the tenancy are a subdivided unit;
4. the tenant is a natural person;
5. the purpose of the tenancy is for the tenant’s own dwelling; and
6. the tenancy is not one specified in Schedule 6 to the Ordinance, i.e. the tenancy is not an excluded tenancy.

Which premises are covered?

A “subdivided unit” means premises that form part of a unit of a building. As long as the building plan of the premise that has been divided and rented has been approved by the Building Department, tenancies on the unit will be regulated by Ordinance, regardless of whether the interior structures involved comply with the Building Ordinance.

In general, the Ordinance covers subdivided units in domestic, industrial and commercial buildings, and of different types (including cubicles, bedspaces, space capsules, lofts, cage homes, rooftop houses and podium houses, etc.) for domestic use.

Which premises are not covered?

The regulations do not cover structures/building works that have not been covered by approved building plans. In the absence of such plans, it would be impossible to delineate the boundary of a “unit” and hence determine whether the premises of the subject tenancy are a subdivided unit.

It follows that tenancies of the following categories do not fall within the regulations under the Ordinance:

1. tenancies on unauthorized building works or structures erected on private land or government land for domestic uses (e.g., squatters), irrespective of whether they are tolerated or not;
2. tenancies on “New Territories Exempted Houses” for domestic uses.

Legality of building structures

The Ordinance does not “legalise” subdivided units in industrial/commercial buildings or temporary structures. The new tenancy control regime would not prejudice law enforcement actions taken by relevant authorities under existing legislations, particularly in respect of building and fire safety; and regulated tenancy would not necessarily constitute a reasonable excuse for owners not to comply with statutory orders, lease enforcement notices and other enforcement notices issued by relevant government departments in the exercise of their legal authorities. If a statutory order is served to require the demolition of a subdivided unit that is under a regulated tenancy, the relevant person is obliged to comply with such order.