c) Transitional Arrangements

c) Transitional Arrangements

Transitional arrangements for fixed-term and periodic tenancies under Part IVA of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) are different.

Fixed-term tenancy is a tenancy agreement for a certain term (e.g. for two years). At common law a tenancy for a fixed term expires automatically at the end of that term and, subject to any agreement between the parties to the contrary, is determined by the effluxion of time alone, without the need for any other act or notice.

Periodic tenancy is a tenancy by the period (e.g. weekly tenancy and monthly tenancy) and does not expire without notice at the end of the period or at the end of each period, there being not a reletting at the beginning of every week or period but a springing interest which arises and which is determined only by proper notice to quit.

Both periodic and fixed-term tenancies can be created orally or in writing.

Tenancies commenced before the material date

Transitional arrangement for fixed-term tenancies commenced before 22 January 2022: The terms as well as rights and obligations of the landlord and the tenant under fixed-term tenancy agreements are not regulated.

Transitional arrangement for periodic tenancies commenced before 22 January 2022: The arrangement is governed by section 120AAQ of the Ordinance which provides for “deemed first term tenancy in certain circumstances”:

1. If a period of the tenancy commences (usually taken as the monthly rent payment date) on 22 January 2022, the tenancy is taken to be a first term tenancy, and the term of the tenancy is taken to be 2 years commencing on 22 January 2022. The rent agreed by the parties to be payable by the tenant at the commencement of the reference period is taken to be the rent for the first term tenancy.
2. If a period of the tenancy straddles 22 January 2022, the tenancy is taken to be a first term tenancy and the term of the tenancy is taken to be 2 years commencing on the date immediately after the expiry of the period that straddles 22 January 2022. Similarly, the rent agreed by the parties to be payable by the tenant at the commencement of the reference period is taken to be the rent for the first term tenancy.

Tenancies commenced on or after the material date

A fixed-term tenancy for a term of 2 years commencing on or after 22 January 2022, will be taken to be the first term tenancy regulated by the Ordinance.

A tenancy that purports to be (i) a periodic tenancy or (ii) a tenancy for a term other than of 2 years, commencing on or after 22 January 2022 is taken to be a first term tenancy:

1. the term of the tenancy is taken to be 2 years commencing on (i) the date of the creation of the tenancy; or (ii) a later date agreed by the parties for the commencement of the tenancy; and
2. the rent agreed by the parties to be payable by the tenant at the commencement of the tenancy is taken to be the rent for the first term tenancy.

The following examples, applicable to both written and oral tenancies, demonstrate when the regulated first term tenancies would commence:

1. A fixed-term tenancy commencing on 1 January 2022: The tenancy, the term and the rent are not regulated by the Ordinance.
2. A fixed-term tenancy commencing on or after 22 January 2022: The first regulated term of 2 years would commence with the beginning of the tenancy term, no matter how long the term is provided in the tenancy agreements. The rent agreed by the parties to be payable at the commencement of the tenancy is taken to be the rent of the first term tenancy.
3. A periodic (monthly) tenancy commencing on 1 December 2021: The first regulated term of 2 years commenced on 1 February 2022, the date immediately after the expiry of the period (1 January – 31 January 2022) that straddles the material date (22 January 2022). In the usual term, that is the first rent payment day after the material date of the Ordinance. The rent agreed by the parties to be payable by the tenant at the commencement of the straddling period (i.e., 1 January 2022) is taken to be the rent of the first term tenancy.
4. A periodic (monthly) tenancy commencing on 22 December 2021: The first regulated term of 2 years commenced on 22 January 2022, since a period of the tenancy (22 January – 21 February 2022) commenced exactly on the material date of the Ordinance. The rent agreed by the parties to be payable by the tenant at the commencement of that period (i.e., 22 January 2022) is taken to be the rent of the first term tenancy.
5. A periodic (monthly) tenancy commencing on or after 22 January 2022: The first regulated term of 2 years commenced with the beginning of the tenancy term. The rent agreed by the parties to be payable at the commencement of the tenancy is taken to be the rent of the first term tenancy.