Rents crackdown on subdivided flats

Top News | Wallis Wang and Maisy Mok 7 Jul 2021

Rent control for subdivided flats will be introduced at the end of the year at the earliest, says the Secretary for Transport and Housing, Frank Chan Fan, with the bill to be gazetted on Friday.

The bill will cover some illegal subdivided units in industrial buildings and rooftops to protect the tenants living there, while protecting at least 226,000 people living in 100,943 subdivided units.

The bill will be tabled in the Legislative Council for first reading next Wednesday and could be enforced at the end of this year or the beginning of next year, if lawmakers pass it, Chan said.

Chan said yesterday landlords and tenants of subdivided flats must sign a two-year standard tenancy agreement under the bill. Landlords cannot increase rents in the two years but they could reduce the rents and tenants would get priority to renew leases for another two years, he said.

Landlords and tenants could negotiate to sign a new deal after the total four-year period.

Landlords could raise rents when tenants renew the leases but could only increase them according to the Rating and Valuation Department's rental index for residential properties, with increases capped at 15 percent.

But Chan said the government will not set up an initial rent guideline for all subdivided units because the authorities have to create a scientific database of rents first, which is time-consuming.

"It's not that we can't set the initial rent guideline, but we need to use certain methods and processes to do so," he said.

But Chan dismissed tenants' concerns that landlords would increase rents to a high level in the first instance if initial rents are not regulated.

"If the landlords are afraid that the rent control would affect their interests, they would have increased the rents already. We haven't seen such a trend so far."

Chan also said the bill would ban landlords from overcharging electricity and water fees.

Landlords who overcharge tenants for the first time will be fined HK$10,000, and those who reoffend will be fined HK$25,000.

On illegal subdivided units, Chan said: "Although some subdivided flats involve unlawful occupation of land, there is still a need for us to protect the tenants because they are underprivileged and have lower income.

"But we must stress that the bill is not legalizing illegal subdivided flats in industrial buildings and temporary buildings."

He added that the implementation of the rent control bill will not affect other government departments' law enforcement actions, especially those concerning building and fire safety.

The Hong Kong Council of Social Service welcomed the measures but its business director, Wong Anthony Wong Kin-wai, said the four-year lease security may not be enough for tenants and suggested the government should consider extending it to six years.

He also said there is a need for the government to regulate initial rents.

A lawmaker of the Democratic Alliance for the Betterment and Progress of Hong Kong, Vincent Cheng Wing-shun, and Alice Mak Mei-Kuen, of the Hong Kong Federation of Trade Unions, also said a 15 percent increase in rents is still too high and suggested the government should lower the limit to 10 percent.

Cheng warned he would propose an amendment to the bill in the Legislative Council.

But landlords criticized the government for helping only tenants and interfering in the market.

The chairman of the Hong Kong Owners Club, Diamond Shea Hing-wan, said the four-year tenure would cause a lot of disputes between landlords and tenants.

Shea claimed many landlords will no longer rent out their flats and the government has to take responsibility if some tenants end up homeless.

Preston Cheung, senior advocacy and communications officer of human rights group Justice Centre Hong Kong, said many of the 13,000 asylum seekers in Hong Kong live in subdivided flats.

But he said refugees may not realize their rights are protected by the bill due to the language barrier, and urged the government to help them.

A report in March estimated that more than 226,000 people live in 100,943 subdivided units in Hong Kong.

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