Temporary law to ban landlords from evicting tenants who fail to pay rents: FS

A temporary law will be introduced to prohibit landlords from terminating contracts with or suing tenants of specified sectors if they fail to pay rents on schedule, Financial Secretary Paul Chan Mo-po said.

The short-term law will be gazetted on Friday to carry a fine for landlords – from HK$50,000 to three times of the sum of rents tenants owe them, according to a government source.

The source expects 130,000 tenants will be covered by the relief measure, which will be valid for three months and, if needed, extended for another three months, with the legislation set to automatically lapse after six months.

It will cover all sectors affected by health regulations, including restaurants and 23 types of premises closed amid stringent social distancing measures -- including hair salons, bars, cinemas and gyms -- as Chief Executive Carrie Lam Cheng Yuet-ngor on Tuesday previewed to extend their closure and dine-in ban after 6pm until April 20.

"Many SMEs currently face huge challenges amid the adverse business environment," he said. "The arrangement will provide enterprises in deep water with breathing space and help secure employment."  

He said the Hong Kong Monetary Authority will be in close communication with banks to exercise flexibility if landlords' repayment ability is affected due to the reduction of rental income.  

The controversial measure was announced as Chan spelled HK$170 billion of counter-cyclical measures in his Budget on Wednesday.   

Chan pledged support to enterprises during the pandemic, which is expected to boost the economy by around three percentage points.   

He announced that profits tax will be reduced by 100 percent with a ceiling of HK$10,000, reducing government revenue by HK$1.2 billion. Around 151,000 firms will benefit.   

Rates concessions for non-domestic properties will be offered in the year 2022/23, with a ceiling of HK$5,000 per quarter for the first two and HK$2,000 each in the remaining two quarters for each rate-able property.  

Business registration fees for the year 2022/23 and 34 groups of government charges from October this year to September next year will be waived.   

Up to 75 percent of water and sewage charges for non-domestic households will also continue to be waived until November next year, with a monthly cap of HK$20,000 and HK$12,500, respectively, per household.  

Tenants at government premises will continue to enjoy a 75 percent rental and fee concession until September next year.  

The Special 100% Loan Guarantee scheme will see its loan ceiling raised to HK$9 million from HK$6 million and repayment period extended to 10 years from 8.  

The maximum loan amount per enterprise will also be increased to the total sum of employee wages and rents for 27 months from 18, he said, adding the scheme and other programs under the SME Finance Guarantee Scheme will see their application period extended for one year to June next year.  

To help businesses enhance cash flow, Chan said he has requested the Hong Kong Monetary Authority to extend the Pre-approved Principal Payment Holiday Scheme for six months to the end of October this year.  

He said in the meantime, the HKMA and banks will offer enterprises the option to make partial repayment of principal over a longer period of time.   

"During this critical juncture of fighting the epidemic, we must take all necessary measures to preserve the vitality of the economy, in particular the survival of small and medium enterprises, and strive to safeguard jobs," Chan said.  

Apart from short-term relief, the government has also planned for post-pandemic economic revival and a future investment for medium- and long-term economies.   

Chan also forecasts the inflation rate to be 2.1 percent this year while predicting Hong Kong to achieve economic growth of between two and 3.5 percent.