e) Security of Tenure

e) Security of Tenure

Security of tenure usually involves the provision of a certain level of certainty to a tenant that he will not be arbitrarily ejected or evicted from the land.

Each regulated tenancy is a term of 2 years. Unless under the circumstances specified in the Part IVA of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7), the landlord cannot terminate the tenancy before the expiry of the term.

A regulated cycle is to comprise 2 consecutive regulated tenancies (i.e., the first term tenancy and the second term tenancy).

A tenant of a first term tenancy is entitled to be granted a second term tenancy of the regulated cycle, thus enjoying a total of 4 years (first term 2 years + second term 2 years) of security of tenure. The term and the conditions of the second term tenancy are to be the same as those of the first term tenancy, except for the period of the tenancy and the amount of rent.

At the end of the 4-year cycle, the landlord and the tenant can freely negotiate the first tenancy agreement for the next regulated cycle.

Early Termination of Regulated Tenancy by Tenant

A tenant may terminate the tenancy by giving the landlord not less than 30 days’ prior notice in writing. However, the date of termination must not be a date earlier than the last day of the first year of the term.

If there is no other provision in the tenancy agreement that the tenant may determine the tenancy during its term other than that provided in the Ordinance, the tenant is subject to the restriction that the date of termination of the tenancy cannot be earlier than the last day of the first year of the first term tenancy or the second term tenancy. Nonetheless, Part IVA of the Ordinance does not prohibit a tenant from surrendering the tenancy to the landlord before the expiry of the term if both parties can reach a consensus. The tenant may negotiate with the landlord on early termination of the tenancy, but the landlord is not obligated to accept the request.

However, the tenant may terminate the tenancy throughout the term by giving the landlord not less than 30 days’ prior notice in writing, in accordance with the following provisions under Part IVA of the Ordinance, if the landlord fails:

• to serve the tenancy agreement in writing within 30 days upon demand by the tenant; or,
• to maintain and keep in repair, where applicable:
  • the drains, pipes, electrical wiring serving the premises exclusively;
  • the windows of the premises;
  • the fixtures and fittings provided by the landlord in the premises, and keep in working order.

If a tenant foresees that he/she may need to terminate a regulated tenancy early under certain circumstances, he/she may wish to negotiate with the landlord to secure such a right for early termination in the tenancy agreement before entering into the first term tenancy. Part IVA of the Ordinance does not limit any rights of the tenant to terminate the tenancy by notice under the tenancy.

Early Termination of Regulated Tenancy by Landlord

Unless under the provisions specified by Part IVA of the Ordinance, the landlord cannot terminate the tenancy before the expiry of the term. Even if the tenancy has any conditions for forfeiture other than the specified provisions, they should be deemed invalid and shall be void.

According to Part IVA of the Ordinance, if the tenant is in breach of any of the following provisions under Part 4 of Schedule 7 to the Ordinance, the landlord may enforce the right of re-entry or forfeiture:

• fails to pay rent within 15 days after the due date, except where the tenant is withholding the payment of rent on the ground that the landlord fails:
  • to serve the tenancy agreement in writing within 30 days upon demand by the tenant; or,
  • to return a counterpart of the stamped tenancy agreement within 30 days upon receiving the agreement signed by the tenant;
• persistently fails to pay rent as and when it falls due;
• makes any structural alteration, or permits or suffers any structural alternation to be made, to the premises without the prior consent in writing of landlord;
• uses the premises, or permit or suffer the premises to be used, for any immoral or illegal purpose;
• does anything, or permits or suffers anything to be done, on the premises that would cause any unnecessary annoyance, inconvenience or disturbance to the landlord or any other person;
• assign or underlet the whole of the premises to another person, or otherwise part with possession of the whole of the premises;
• underlet part of the premises to another person without the prior consent in writing of the landlord.

The tenancy of the premises is terminated immediately on the landlord’s re-entry on any of the grounds above.

Other Interests

However, even though the landlord cannot wilfully terminate the tenancy early, the 4-year security of tenure may be subject to other interests related to the premises.

For example, subdividing premises into units may result in breaches of government leases, building regulations, fire regulations and/or deed of mutual covenants etc. (see “Other Legal Issues”). 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.

In old districts where many of the subdivided units are located, it is not uncommon that the premises concerned would be included in a redevelopment plan or subject to compulsory sales. The ownership of the premises will be transferred while the tenants, compensated or resettled, are required to move out according to statutes (see the question on urban renewal and compulsory sales).

If the regulated tenancy is a sub-tenancy arising from another tenancy, the sub-tenant living in the subdivided unit must also hand over the property back to the landlord when the superior tenancy ends or is forfeited (see “Regulated Tenancy as Sub-tenancy”).