B. Regulation of Basic Housing Units

a. Overview and Objectives

The Basic Housing Units Ordinance (Cap. 658) introduces a regulatory regime for the letting of subdivided units in residential buildings, or the residential parts of composite buildings, for habitation. Under the Basic Housing Unit (BHU) regulatory regime, subdivided units in residential buildings must comply with a set of minimum standards of living conditions and obtain BHU recognition before they can be legally let out for habitation. This aims to ensure the provision of safe, hygienic and reasonable living conditions in subdivided units.

b. Scope of Application

The BHU regulatory regime apply when:

A flat in a residential building, or the residential part of a composite building, is divided (or re‑divided) using partition installations/materials like brick walls, metal panels, wooden boards, sliding panels, tall cupboards, or similar partitions; and
This new layout is different from the original layout shown on the approved building plan; and
The division creates two or more wholly or substantially enclosed areas, each intended to be rented out separately for residential use.

The BHU regulatory regime does not apply to the following premises:

Premises as stipulated in Part 2 of Schedule 4 to the Ordinance, i.e. premises being regulated by other existing statutory regimes, including bedspace apartments, hotels or guesthouses, residential care homes, residential care homes for person with disabilities, child care centres, drug dependent persons treatment, rehabilitation centres, other similar premises, etc.; and

Flats located in the non-residential part of a composite building, commercial buildings, industrial buildings, illegal structures (including squatter structures and unauthorised building works located at rooftops, flat roofs, lanes, light wells, yards etc. constructed in contravention of the Buildings Ordinance (Cap. 123)), and any storeys of New Territories Exempted Houses.

c. Minimum standards for BHU recognition

To qualify for BHU recognition, a subdivided unit must comply with a set of minimum standards of living conditions. These minimum standards cover, among other things:

A minimum internal floor area of 8 m², and a minimum height of 2.3 m from floor to ceiling and 2.0 m from floor to the underside of any beam.
Adequate fire safety and structural safety measures, including compliance with requirements designed to prevent overloading of the building
A separate toilet that meets prescribed sanitary standards.
A water supply point and a sink located outside the toilet.
Provision of suitable lighting and ventilation.
Separate water and electricity meters.

d. Commencement Dates and Implementation Phases

The Ordinance is implemented in two phases.

Phase 1 — 1 March 2026

The Ordinance comes into effect, except for the provisions concerning the offence of illegal letting of subdivided units (section 8).

(i) Existing subdivided units

A 12-month registration system launches (until 28 February 2027) for existing subdivided units. Flats with at least one valid tenancy of a subdivided unit during the period from 4 July 2025 to 3 October 2025 are eligible for registration.

Within the registration period, Owners are required to make registration applications to obtain a 36-month grace period (running from 1 March 2027 to 28 February 2030), during which they can carry out necessary alteration works and submit applications for BHU recognition.

(ii) New subdivided units

New subdivided units that come into existence after 1 March 2026 must be recognized as BHUs before being let.

The BHU recognition system launches to accept applications from subdivided units that comply with the minimum standards of living conditions. Valid BHU recognitions are granted for a 5-year term.

Phase 2 — 1 March 2027

The provisions concerning the offence of illegal letting of subdivided units (section 8) come into effect. Any person who lets out a subdivided unit without a valid grace-period registration or valid BHU recognition commits an offence involving criminal liability.

e. Criminal penalties

A person who lets a subdivided unit without a valid grace‑period registration or valid BHU recognition commits an offence. The maximum criminal penalty for illegally letting a subdivided unit without a valid grace-period registration or valid BHU recognition is a fine of $300,000 and imprisonment for 3 years. If the offence continues, there can also be an extra fine of $20,000 for each day the offence continues.

The six‑month period immediately before the expiry of the grace period (i.e. from 1 September 2029 to 28 February 2030) is the “countdown period”. During the countdown period, no person may enter into a new tenancy for a subdivided unit in a registered flat that does not have valid BHU recognition. Any person who does so commits an offence and is subject to the same criminal liability described above.

Tenants occupying the unrecognised subdivided units are not criminally liable for renting such units.

f. Termination of tenancy

If the Secretary for Housing is satisfied that a subdivided unit is being let out illegally, he may direct the termination of the relevant domestic tenancy by means of a termination notice.

g. Statutory compensation

If the Secretary for Housing orders the tenancy to be terminated because the subdivided unit is being let illegally, the tenant can claim statutory compensation from the operator as a civil debt. The maximum amount the tenant can recover is the lower of 3 months’ rent or the total rent for the remaining term of the tenancy.

For instance, if the tenant’s rent is HK$5,000 per month and there are 6 months left on the tenancy, he could claim up to HK$15,000 (three months’ rent). If there is only 2 months left, he could claim HK$10,000 — because that is less than three months’ rent.

However, getting that compensation does not stop the tenant from making further claims against the operator under common law.