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Detailed Guide

PART 1: Finding a Property

  • Property Search: Use ZAP's property search to find properties that meet your requirements and contact sellers directly to arrange viewings by using ZAP's secure emailing system.
  • Simple Tools: ZAP has a few simple tools to make your search and inspections easier. If you find multiple properties that you are interested in, simply add them to your Interest Basket to view them later in one place (only registered users can use the Interest Basket, fortunately registration is FREE and easy). Once in the Interest Basket you can then print inspection itineraries and comment forms for the properties you have selected, as well as see an auto-populated Google Maps to view all the properties together.
  • Market Info and ZAP Resources: You can also find out how the owner's asking price compares to recent market activity by taking a look at recent transactions in your building or compare it to recent bank valuations. You can do this any time using the ZAP Mortgage Centre.
  • Do Your Homework: Caveat Emptor (Buyer Beware) means that as a Buyer you accept the property as is when you buy it. As well as having your lawyer take care of the legal due diligence, ZAP recommends doing some basic due diligence of your own once you are interested in a property including checking the building's notice boards or speaking to the building management company to ask if there's anything you should know about such as an upcoming renovation project.
  • Quick Tips When Negotiating and Viewing A Property:
    • Try and view the property more than once preferably in the day and possibly in the evening.
    • Ask what is included in the selling price for example a car park, roof top etc.
    • Why is the Landlord selling? Could you use this as a bargaining tool?
    • Look in the corners of the windows and the ceiling to see if there are any water marks or water damage?
    • Using ZAP's Resources page to find out the latest transactions in that building to compare to the asking price, and also compare it with current Bank Valuations.
    • Are you satisfied with noise levels for neighbours or the road?
    • Are pets allowed in the building?

ZAP's approach offers much safer transactions and more peace of mind than conventional agent transactions. Before anything is signed ZAP advocates introducing a lawyer to the process and centralizing the transaction around said lawyer who will handle the entire transaction at a fraction of the cost of agency fees and provide you with unbiased advice! That's right a person with years of legal training will advise and take you through all the steps for a lot less than an agent. In fact even if you are using an agent to buy a property you are required by law to have a lawyer represent you, so why not simply use them for the whole process?

Need A Lawyer? ZAP has an independent panel of lawyers which you can choose from and will assist you through the property transactions. Please note ZAP does not accept any commission or payment from lawyers on our panel.

Once you have a lawyer their first step is to inspect the Land Search to verify title and ensure there are no legal charges on the property or the building it is in.

Mortgage Options: If you do not plan on an outright cash purchase of a property then you will need a mortgage.

You have two options:

  1. Visit ZAP's Mortgage Centre and simply send us your requirements. ZAP will help you search all the major lenders to find you the best mortgage deal in town within 72 hours all for FREE. This service is open to everyone, even if you have not found your property on ZAP.
  2. ZAP's Mortgage Centre also has a list of all the main banks so you can contact and request mortgage information individually from every major lender in town. ZAP suggests checking a few at least as deals can differ substantially.

Conventionally banks can offer a loan of up to 70% of the property value and the Hong Kong Mortgage Corporation (HKMC) can offer up to an additional 25% (see www.hkmc.com.hk for details or consult with your bank). If you require the additional 25% from the Hong Kong Mortgage Corporation please note that the additional loan will incur a Mortgage Insurance Premium charge for the additional loan. Terms can vary quite significantly from bank to bank on the primary loan, as well as valuations so ask your bank / mortgage provider about this.

If both parties are agreed on terms and you have been given the green light by your lawyer after inspecting the property and Land Search, then you're ready to enter into a Provisional Sale & Purchase Agreement.

ZAP has a standard Provisional Sale and Purchase agreement, approved by our panel of lawyers. This is available below for free or simply ask your lawyer to supply you with one.

Click here to download a Provisional Sales & Purchase Agreement

Your Lawyer will help you with this but below are some notes on filling in a Provisional S&P:

  1. Deposit Cheque: The signing of a Provisional S&P should be accompanied by an initial deposit cheque, normally 3% of the agreed purchase price (but can be in the region of 2-5% if the parties so desire). It is always safest to make the cheque out to the Seller's appointed lawyer. This is a must if the seller has an outstanding mortgage on the property, but is good practice even if this is not the case.
  2. Setting Formal S&P date: The parties must sign the Formal Sale and Purchase Agreement (Formal S&P) within 14 days of the signing of the Provisional S&P. A further deposit is payable to take the total deposit amount to 10% of the agreed (i.e. if the initial deposit was 3% then the additional deposit will be 7%). Therefore, in the Provisional Sales & Purchase Agreement both parties must confirm the date.
  3. Setting Final Completion date: The Final Completion Date is flexible, but 3-4 weeks after the signing of the Formal S&P is usually considered a reasonable amount of time. A total of 6 weeks from Provisional S&P to Completion is enough to complete most mortgages including those that involve the HKMC. Your bank should advise you on this.
  4. Business Day: Get out your calendar! Completion date must be on a business day.
  5. Identification: Each party should provide the other with a signed photocopy of their HK I.D. card. This is not a legal requirement, but is good practice. If the other party is a company, please request a copy of their Business Registration (B.R.) document and use of company chop (ink stamp) upon signing.

N.B. It is possible for the parties to go straight to a Formal Sale & Purchase Agreement, however it is standard practice and recommended that a Provisional Agreement is entered into first. The Formal is a much more complex document and takes much more time for your lawyer to ratify, so the Provisional allows both parties to agree on the principal terms in a time.

  • Purchasers Applying for Mortgage: As the purchaser requires a signed Provisional Agreement to get a mortgage application underway. It is best to submit your signed Provisional Agreement to your preferred mortgage bank as soon as possible.
  • Buyer's Costs: Other costs are primarily Stamp Duty, a tax which ranges from HK$100 to 4.25% of the purchase price depending on the value of the transaction; and standard legal costs. There are no agency fees, normally 1% of the purchase price, for a ZAP purchase transaction,
    Update: The HK Government recently introduced a Special Stamp Duty (SSD) applicable to residential properties purchased on or after 20 November 2010. If a property acquired on or after that date is sold within 24 months both Seller and Buyer are held jointly and severally liable for the SSD, unless otherwise agreed.
    In practice one would expect the Seller to bear this burden. Please consult with your lawyer before signing to make sure this does not apply to the property you are interested in.

Your lawyer will guide you through the remaining steps including the Formal S&P, communication with banks and finally handing over the keys.

Final Inspections: It is recommended the purchaser saves one visit to the day before or day of completion to ensure everything is in order before the final balance is paid.

Hand Over: This can either be done in person or the lawyer can receive the keys from the seller if you desire.

PART 1: Selling a Property With ZAP

  • Advertise / Post Your Property on ZAP for FREE: Simply upload your property details, a brief description and photos on ZAP for FREE by clicking here. Your property will immediately be on the market in the best place it can be: online and viewable anytime, anywhere. Buyers will contact you via ZAP's secure email portal without seeing your email address and it's your choice to reply.

    Deciding on your Asking Price? ZAP recommends users to use all three of the below options in order to be best informed on current market prices and make the best decision.

    Option 1: Accurate Valuation
    Contact a number of banks by telephone and ask for a real time valuations. For an easy to use list of all major banks click here.

    Option 2: Quick Valuations
    Find online valuation within seconds using ZAP's Valuation page. N.B. It's also worth contacting the bank directly as online valuations can lag recent movements in the market.

    Option 3: Practical Valuation
    Find out what similar properties in your building or estate have recently sold for in order to give you a more realistic price, for more information use the ZAP Resources page.
  • Quick Tips When Showing Your Property:
    • Make sure your property is clean and tidy
    • Have an asking price in mind and also a bottom price in mind before hand
    • Highlight to potential buyers what is included and what is not included in the price e.g. car park
    • Introduce the benefits of the area and the building for example sports facilities, shuttle bus etc
    • Highlight the advantages of your property for example storage space, new fittings etc
  • Improve Your Chances of Being Contacted By Potential Tenants:
    • After you have advertised your property on ZAP select the link to your property and copy & paste it in your Facebook status
    • "Like" your property on Facebook
    • Use ZAP's "Send To Friend" function to email your property

ZAP's approach offers much safer transactions than agents transactions. Before anything is signed with a potential buyer ZAP advocates introducing a lawyer to the process and centralizing the transaction around the lawyer who will handle the entire transaction at a fraction of the cost compared to agents and provide unbiased advice! That's right a person with years of legal training and an oath to uphold will advise and take users through all the steps for a lot less than an agent. In fact even if you are using an agent to buy a property you are required by law to have a lawyer represent you, so why not simply use them for the whole process?

Need A Lawyer? ZAP has an independent panel of lawyers which you can choose from and will assist you through the property transactions. Please note ZAP does not accept any commission or payment from lawyers on our panel.

Once you have a lawyer their first step at this stage is to inspect the Land Search to verify title and ensure there are no legal charges on the property or the building it is in.

Seller's costs: It is common practice in Hong Kong for only the purchaser to pay the stamp duty for a Sale & Purchase Transaction therefore as a seller your costs are just standard legal costs which are much less than standard agency fees and commissions.

If both parties are agreed on terms and you have been given the green light by your lawyer after inspecting the property and Land Search, then you're ready to enter into a Provisional Sale & Purchase Agreement.

ZAP has a standard Provisional Sale and Purchase agreement, approved by our panel of lawyers. This is available below for free or simply ask your lawyer to supply you with one.

Click here to download a Provisional Sales & Purchase Agreement

Your lawyer will help you with this but below are some notes on filling in a Provisional S&P. If you're choosing to sign a Provisional S&P agreement before involving a lawyer - which ZAP does not recommend, please read these extremely carefully:

  1. Deposit Cheque: The signing of a Provisional S&P should be accompanied by an initial deposit cheque, normally 3% of the agreed purchase price (but can be in the region of 2-5% if the parties so desire). It is good practice for the buyer to make the cheque out to your chosen legal firm.
  2. Setting Formal S&P date: The parties must sign the Formal Sale and Purchase Agreement (Formal S&P) within 14 days of the signing of the Provisional S&P. A further deposit is payable to take the total deposit amount to 10% of the agreed (i.e. if the initial deposit was 3% then the additional deposit will be 7%). Therefore, in the Provisional Sales & Purchase Agreement both parties must confirm the date.
  3. Setting Final Completion date: The Final Completion Date is flexible, but 3-4 weeks after the signing of the Formal S&P is usually considered a reasonable amount of time. A total of 6 weeks from Provisional S&P to Completion is enough to complete most mortgages including those that involve the HKMC. The Purchaser's bank should advise him on this.
  4. Business Day: Get out your calendar! Completion date must be on a business day.
  5. Identification: Each party should provide the other with a signed photocopy of their HK I.D. card. This is not a legal requirement, but is good practice. If the other party is a company, please request a copy of their Business Registration (B.R.) document and use of company chop (ink stamp) upon signing.

N.B. It is possible for the parties to go straight to a Formal Sale & Purchase Agreement, however it is standard practice and recommended that a Provisional Agreement is entered into first. The Formal is a much more complex document and takes much more time for your lawyer to ratify, so the Provisional allows both parties to agree on the principal terms in a timely manner, as well as providing a document for the purchaser to apply for a mortgage.

Your lawyer will guide you through the remaining steps including the Formal S&P, communication with banks, and finally handing over the keys.

Final Inspections: It is recommended the purchaser saves one visit to the day before or day of completion to ensure everything is in order before the final balance is paid.

Hand Over: This can either be done in person or the lawyer can receive the keys from the seller if you desire.

Step 1: Put Your Property On The Market With ZAP

  • Advertise / Post Your Property on ZAP for FREE: Simply upload your property details, a brief description and photos on ZAP for FREE by clicking here. Potential tenants will contact you via ZAP's secure email portal without seeing your email address and it's your choice to reply.

    Deciding on your Rental Price? A good start is to find out what similar properties in your building or estate have recently rented for in order to give you a more realistic price for more information check Recent Transactions on ZAP Resources page. If you cannot find any information ZAP suggests you look at rental price per square foot in the surrounding area.

    Inclusive/Exclusive Rent: Once you have decided what your asking rent is going to be, you need to decide whether that rent is inclusive or exclusive of management fees, government rent or rates. N.B. Inclusive rental agreements are the norm nowadays.
  • Quick Tips When Showing Your Property:
    • Make sure your property is clean and tidy - this makes a big difference
    • Have an asking rental price in mind and also a bottom price in mind
    • Highlight to potential tenants what is included and what is not included in the price e.g. car park
    • Introduce the benefits of the area and the building for example sports facilities, shuttle bus etc
    • Highlight the advantages of your property for example storage space, new fittings etc
  • Improve Your Chances of Being Contacted By Potential Tenants:
    • After you have advertised your property on ZAP select the link to your property and copy & paste it in your Facebook status
    • "Like" your property on Facebook
    • Use ZAP's "Send To Friend" function to email your property

Residential Tenancy Agreements (less than three years in duration) are not required to be legally registered as a charge on your property. However, there are still missteps that can be made and as always the safest way to proceed is by seeking legal advice and paying a lawyer to handle the transaction. This is not necessary if you know what you're doing, however one of the benefits of a non-agent transaction is that you may feel more able to direct a small portion of what you have saved to having a lawyer look after your interests.

Advantage of using a Lawyer for Rentals

Disadvantage of using a Lawyer for Rentals

Safer transaction

Even if much less than agency fees you have to pay lawyers' fees

All the process will be taken care of on your behalf including processing the Stamp Duty

You have to visit the Revenue Department to pay Stamp Duty and finalize contract - This is not difficult

Option A: Use a Lawyer

If you have limited experience in property then ZAP advocates introducing a lawyer to the process and centralizing the transaction around the lawyer who will handle the entire process at a fraction of the cost compared to agents as well as providing you with unbiased advice! That's right a person with years of legal training will advise and take you through all the steps for a lot less than an agent.

Option B: Proceed Without Using A Lawyer

If you have experience or have a limited budget rental transactions in Hong Kong can and do take place without formal legal assistance. However, there are a number of things you need to be aware of if you do. ZAP highlights the key points below but for official information please visit HK Government or the Estate Agent Authority websites

Below is a free copy of a generic Tenancy Agreement approved by our panel of lawyer. In addition we have included useful notes on what to look out for and agree upon when filling in a Tenancy Agreement:

Tenancy Agreement

Note on Tenancy Agreement

[Please Note: Provisional Tenancy agreements are primarily used by agents to lock in a commission before discussing full terms. ZAP recommends going straight to a Formal Tenancy agreement]

NOTES:

  • Land Search: The prospective Tenant should carry out a Land Search to verify that the Landlord is the owner of the property and therefore has the right to rent the property to the Tenant.
  • Agreeing on Principle Terms:
    1. Rent Inclusive or Exclusive of: Management fees, carpark etc?
    2. Duration of the Tenancy: A standard Residential Tenancy in HK comprises of a two year term, and often (but not always) contains an option to break after 14 months by giving at least two months advance written notice (ie a two month notice given at the end of the 12th month of the tenancy). However, the parties are at liberty to agree on whatever tenancy duration they see fit, with or without a break clause. See our FAQ for Tenancies of three years or more.
  • Rent free periods: Are always subject to negotiation, but it is not uncommon for a Tenancy Agreement to include a few days to a week to allow for a moving-in period for the Tenant. Rent free periods can be longer than this depending on what the parties negotiate.
  • Deposit: It is common for the future Tenant to provide consideration (ie a deposit) upon entering a Tenancy Agreement, usually in the region of one month's rent equivalent. A Landlord will also normally require a security deposit equivalent to 1, 2 or 3 months rent which he will hold for the duration of the tenancy. Rent is ordinarily payable at the beginning of each month, therefore if a security deposit of 2 months has been agreed, the Tenant should pay the Landlord 3 months rent in total (inclusive of any initial deposit paid upon entering into the Tenancy Agreement) before taking possession of the property.
  • Other terms to consider:

    Who is responsible for upkeep of the property? - An occasional grey or unattended to area.
    Parties may agree however they desire on these issues, but ZAP's opinion is as follows:
    • External condition: Such as building issues, common areas, and structural issues should always be the responsibility of the Landlord or Building Management (supported by common law).
    • Internal condition: ZAP suggests that it is equitable for the Landlord to be responsible for the internal condition as well e.g. plumbing, appliances and fixtures that would be expected to outlast the duration of the Tenancy, unless it is due to the Tenant's own negligence or being the direct cause of the damage.
    • Inventory List: To protect both parties it is advisable to do a comprehensive inventory list of the fittings, electrical appliances and furniture if any that are supplied with the property
    • Subletting: The Tenancy Agreement should clearly state whether the landlord will allow the tenant to sublet the rental property or not.

The Estate Agent's Authority is also a good resource: Notes on Signing a Tenancy Agreement.

If you plan to appoint a lawyer, they will be able to provide you with a Tenancy Agreement. ZAP also provides a free standard Tenancy Agreement that endeavours to be equitable and fair to both parties. In the absence of a mutual Formal Tenancy Agreement, the Landlord should normally provide the Formal Tenancy Agreement.

Transaction using a Lawyer for Rental

Transaction NOT using a Lawyer for Rentals

Lawyer's fees for processing Tenancy Agreements start at $2-3,000 and often scale higher depending on the value of the transaction. Expected services:

The steps required to successfully execute a Rental Transaction on your own are:

Carry out the Land Search

Sign a Formal Tenancy Agreement after carrying out a Land Search, verifying the landlord's identity (and thereby title to the property) and agreeing on terms.

Execute the agreement and advise on terms

After signing a Tenancy Agreement the agreement must be 'stamped'. Stamp duty is a one-time tax payable to HK's Inland Revenue Department and is required by law. The cost of stamp duty is usually split equally between both parties, therefore it only requires one party to carry it out. ZAP suggests the Landlord may be most suited to handling this. Go to the Government guidelines on Stamp Duty in HK including how to handle them online.

Process and pay the stamp duty for the agreement (referred to as 'stamping' the agreement), CR 109 form if required, and other matters.

If your property is subject to a mortgage loan, most mortgage contracts require that you seek approval from the mortgage bank for approval to let the property. Not all agreements necessarily have this, so it is up to the Landlord / Tenant to decide whether that is required.

Notes:

  • Importance of Stamp Duty: If the Stamp Duty is not paid, the document cannot be registered in the Land Registry, nor can it be received in evidence in any court proceedings (except criminal proceedings and civil proceedings taken by the Collector of Stamp Revenue to recover the Stamp Duty). There is also a late payment penalty for failing to pay the Stamp Duty on the due date.
  • FORM CR 109: The Landlord of a domestic tenancy is required to lodge a Form CR 109 (Notice of New Letting or Renewal Agreement) with the Commissioner of the Rating and Valuation within one month of the execution of the Tenancy Agreement for his endorsement. Without a Form CR 109 endorsed by the Commissioner of Rating and Valuation, a Landlord is not entitled to maintain an action to recover rent from the Tenant. It is therefore important for the Landlord that a Form CR 109 is lodged with the Commissioner of the Rating and Valuation within one month of the execution of a Tenancy Agreement. The form requires the Landlord to supply information on: term of the tenancy, the monthly rental, whether any rent-free period has been given, who will pay the rates, government rent, management fees of the property etc. After endorsement by the Commissioner of Rating and Valuation one copy of the form will be returned to each of the Landlord and the Tenant. If it is submitted after one month, a penalty of $310 will be payable by the landlord.
  • Things to consider before choosing your Tenant: A Landlord should make sure the Tenant has the financial means to fulfill the Tenancy Agreement. The Landlord has the right to ask the tenant about their occupation or financial means, and may go as far as to ask the Tenant to provide proof in this regard.

Once all legal formalities have been completed the next step is arrange for keys to be exchanged. This can either be done in person or via either the Landlord or Tenant's lawyer.

N.B. These guidelines are for reference only and should not be relied upon as legal advice.
Check out the Government's official guide for comparison: Leasing out a Domestic Property

PART 1: Finding a Property

  • Property Search: Use ZAP's property search to find properties that meet your requirements. Contact Landlords directly to arrange viewings using ZAP's secure emailing system and wait for a reply.
  • Simple Tools: ZAP has a few simple tools to make your search and inspections easier. If you find multiple properties you are interested in, add them to your Interest Basket to view them later in one place (only registered users can use the Interest Basket, fortunately registration is FREE and easy). Once in the Interest Basket you can then print inspection itineraries and comment forms for the properties you have selected, as well as see an auto-populated Google Map view of those properties all together.
  • Market Info and ZAP Resources: You can also find out how the owner's asking price compares to recent market activity by taking a look at recent transactions in your building using ZAP's Useful Online Resources page.
  • Do Your Homework: Caveat Emptor means that as a Tenant you accept the property as is when you rent it. ZAP recommends doing some basic due diligence once you are interested in a property including checking the building's notice boards or speaking to the building management company to ask if there's anything you should know about such as an upcoming renovation project.
  • Quick Tips When Negotiating and Viewing A Property:
    • Try and view the property more than once preferably in the day and possibly in the evening
    • Ask what is included in the rental price for example a car park, roof top etc
    • Look in the corners of the windows and the ceiling to see if there are any water marks or water damage?
    • Are you satisfied with noise levels for neighbours or the road?
    • Are pets allowed in the building?

Residential Tenancy Agreements (less than 3 years in duration) are not required to be legally registered as a charge on your property, therefore you are not legally required to use a lawyer. However there are still missteps that can be made and as always the safest way to proceed is by seeking legal advice and paying a lawyer to handle the transaction but this is not necessary if you know what you're doing. One of the benefits of a non-agent transaction is that you may feel more able to direct a portion of what you have saved to having a lawyer look after your interests.

Advantage of using a Lawyer for Rental

Disadvantage of using a Lawyer for Rentals

Safer transaction & peace of mind

Cost. If you are confident with handling a Tenancy Agreement then you can save yourself some money by handling everything yourself.

All the process will be taken care of on your behalf including processing the Stamp Duty

Lawyer's fee, even if much less than agency fee.

Lawyer's fees are much less than agency fees

You have to visit the Revenue Department to pay Stamp Duty and finalize contract - This is not difficult

Option A: Use a Lawyer

If you have limited experience in property then ZAP advocates introducing a lawyer to the process and centralizing the transaction around a lawyer who will handle the entire transaction at a fraction of the cost compared to agents and provide unbiased advice! That's right a person with years of legal training and an oath to uphold will advise and take users through all the steps for a lot less than an agent.

Option B: Proceed Without Using A Lawyer

If you have experience or have a limited budget rental transactions in Hong Kong can and do take place without formal legal assistance. However, there are a number of things you need to be aware of if you do. ZAP highlights the key points below but for official information please visit HK Government or the Estate Agent Authority websites

Below is a free copy of a generic Tenancy Agreement approved by our Panel of Lawyers and some simple guidelines but before completing them please see below points:

Tenancy Agreement

Note on Tenancy Agreement

NOTES:

  • Land Search: The prospective Tenant should carry out a Land Search to verify that the Landlord is the owner of the property and therefore has the right to rent the property to the Tenant.
  • Agreeing on Principle Terms:
    1. Rent Inclusive or Exclusive of? Management fees, carpark etc?
    2. Duration of the tenancy: A standard Residential Tenancy in HK comprises a two year term, and often (but not always) contains an option to break after 14 months by giving at least two months advance written notice (ie a two month notices given at the end of the 12th month of the tenancy). However the parties are at liberty to agree on whatever tenancy duration they see fit, with or without a break clause. See our FAQ for Tenancies of three years or more.
  • Rent free periods: Are always subject to negotiation, but it is not uncommon for a Tenancy Agreement to include a few days to a week to allow for a moving-in period for the Tenant. Rent free periods can be longer than this depending on what the parties negotiate.
  • Deposit: Landlords will normally require a security deposit equivalent to one, two or three months rent which he will hold for the duration of the tenancy. Rent is ordinarily payable at the beginning of each rental month, therefore if a security deposit of two months has been agreed, the Tenant should pay the Landlord three months rent in total (inclusive of any initial deposit paid upon entering into the Tenancy Agreement) before taking possession of the property.
  • Other terms to consider:

    Who is responsible for upkeep of the property? - An occasional grey or unattended to area. Parties may agree however they desire on these issues, but ZAP's opinion is as follows:
    • External condition: Such as building issues, common areas, and structural issues should always be the responsibility of the Landlord or Building Management (supported by common law).
    • Internal condition: ZAP suggests that it is equitable for the Landlord to be responsible for the internal condition as well e.g. plumbing, appliances and fixtures that would be expected to outlast the duration of the Tenancy, unless it is due to the Tenant's own negligence or being the direct cause of the damage.
    • Inventory List: To protect both parties it is advisable to do a comprehensive list of the fittings, electrical appliances and furniture if any that are supplied with the property
    • Subletting: The Tenancy Agreement should clearly state whether the landlord will allow the tenant to sublet the rental property.

The Estate Agent's Authority is also a good resource: Notes on Signing a Tenancy Agreement.

If you plan to appoint a lawyer, they will be able to provide you with a Tenancy Agreement. ZAP also provides a free standard Tenancy Agreement that endeavours to be equitable and fair to both parties. In the absence of a mutual Formal Tenancy Agreement, the Landlord should normally provide the Formal Tenancy Agreement.

Transaction using a Lawyer for Rental

Transaction NOT using a Lawyer for Rentals

Lawyer's fees for processing Tenancy Agreements start at HK$3,000 and often scale higher depending on the value of the transaction. Expected services:

The steps required to successfully execute a Rental Transaction on your own are:

Carry out the Land Search

Sign a Formal Tenancy Agreement after carrying out a Land Search and agreeing on terms.

Execute the agreement and advise on terms

After signing a Tenancy Agreement the agreement must be 'stamped'. Stamp Duty is a one-time tax payable to HK's Inland Revenue Department and is required by law. The cost of Stamp Duty is usually split equally between both parties, therefore it only requires one party to carry it out. ZAP suggests the Landlord may be most suited to handling this. Go to the Government guidelines on Stamp Duty in HK including how to handle them online.

Process and pay the stamp duty for the agreement (referred to as 'stamping' the agreement), CR 109 form if required, and other matters.

If your property is subject to a mortgage loan, most mortgage contracts require that you seek approval from the mortgage bank for approval to let the property. Not all agreements necessarily have this, so it is up to the landlord/tenant to decide whether that is required

Notes:

  • Importance of Stamp Duty: If the Stamp Duty is not paid, the document cannot be registered in the Land Registry, nor can it be received in evidence in any court proceedings (except criminal proceedings and civil proceedings taken by the Collector of Stamp Revenue to recover stamp duty). There is also a late payment penalty for failing to pay the stamp duty on the due date.
  • FORM CR 109: The Landlord of a domestic tenancy is required to lodge a Form CR 109 (Notice of New Letting or Renewal Agreement) with the Commissioner of the Rating and Valuation within one month of the execution of the Tenancy Agreement for his endorsement. Without a Form CR 109 endorsed by the Commissioner of Rating and Valuation, a landlord is not entitled to maintain an action to recover rent from the tenant. It is therefore important for the landlord that a Form CR 109 is lodged with the Commissioner of the Rating and Valuation within one month of the execution of a Tenancy Agreement. The form requires the Landlord to supply information on: term of the tenancy, the monthly rental, whether any rent-free period has been given, who will pay the rates, government rent, management fees of the property etc. After endorsement by the Commissioner of Rating and Valuation one copy of the form will be returned to each of the Landlord and the Tenant. If it is submitted after one month, a penalty of $310 will be payable by the landlord.
  • Things to consider before choosing your Tenant: A Landlord should make sure the Tenant has the financial means to fulfill the Tenancy Agreement. The Landlord has the right to ask the tenant about their occupation or financial means, and may go as far as to ask the tenant to provide proof in this regard.

Once all legal formalities have been completed the next step is arrange for keys to be exchanged. This can either be done in person or via either the Landlord or Tenants lawyer.

N.B. These guidelines are for reference only and should not be relied upon as legal advice.
Check out the Government's official guide for comparison: Leasing a Domestic Property

PART 1: Finding a Property

  • Property Search: Use ZAP's property search to find properties that meet your requirements and contact sellers directly to arrange viewings using ZAP's secure emailing system.
  • Simple Tools: ZAP has a few simple tools to make your search and inspections easier. If you find multiple properties you are interested in, add them to your Interest Basket to view them later in one place (only registered users can use the Interest Basket fortunately registration is FREE and easy). Once in the Interest Basket you can then print inspection itineraries and comment forms for the properties you have selected, as well as see an auto-populated Google Map to view all the properties together.
  • Do Your Homework: Caveat Emptor (Buyer Beware) means that as a buyer you accept the property as is when you buy it. As well as having your lawyer take care of the legal due diligence. ZAP recommends doing some basic due diligence of your own once you are interested in a property including checking the building's notice boards or speaking to the building management company to ask if there's anything you should know about such as an upcoming renovation project.
  • Quick Tips When Negotiating and Viewing A Property:
    • Try and view the property more than once preferably in the day and possibly in the evening
    • Ask what is included in the selling price for example a car park, roof top etc
    • Why is the landlord selling? Could you use this as a bargaining tool?
    • Look in the corners of the windows and the ceiling to see if there are any water marks or water damage?
    • Using ZAP's Online resource find out the latest transaction in that building to compare asking price.
    • Are you satisfied with noise levels for neighbours or the road?
    • Are pets allowed in the building?

ZAP's approach offers much safer transactions and more peace of mind than conventional agent transactions. Before anything is signed ZAP advocates introducing a lawyer to the process and centralizing the transaction around the lawyer who will handle the entire transaction at a fraction of the cost compared to agents and provide unbiased advice! That's right a person with years of legal training and an oath to uphold will advise and take users through all the steps for a lot less than an agent. In fact even if you are using an agent to buy a property you are required by law to have a lawyer represent you, so why not simply use them for the whole process?

Need a Lawyer? ZAP has an independent panel of lawyers which you can choose from and will assist you through the property transactions. Please note ZAP does not accept any commission or payment from solicitors on our panel

Once you have a lawyer their first step at this stage is to inspect the Land Search to verify title and ensure there are no legal charges on the property or the building it is in.

  • Mortgage Options: If you do not plan on an outright cash purchase of a property then you will need a mortgage.

You have two options:

  1. Visit ZAP's Mortgage Centre and simply send us your requirements. ZAP will help you search all the major lenders to you the best mortgage deal in town within 72 hours all for FREE. This service is open to everyone, even if you have not found your property on ZAP.
  2. ZAP's Mortgage Centre also has a list of all the main banks so you can contact and request mortgage information individually from every major lender in town. ZAP suggests checking a few at least as deals can differ substantially.

Conventionally banks can offer a loan of up to 70% of the property value for commercial property

If both parties are agreed on terms and you have been given the green light by your lawyer after inspecting the property and Land Search, then you're ready to enter into a Provisional Sale & Purchase agreement.

ZAP has a standard Provisional Sale and Purchase agreement, approved by our panel of lawyers. This is available below for free or simply ask your lawyer to supply you with one.

Click here to download a Provisional Sales & Purchase Agreement

Your Lawyer will help you with this but below are some notes on filling in a Provisional S&P:

  1. Deposit Cheque: The signing of a Provisional S&P should be accompanied by an initial deposit cheque, normally 3% of the agreed purchase price (but can be in the region of 2-5% if the parties so desire). It is always safest to make the cheque out to the Seller's appointed lawyer. This is a must if the seller has an outstanding mortgage on the property, but is good practice even if this is not the case.
  2. Setting Formal S&P date: The parties must sign the Formal Sale and Purchase Agreement (Formal S&P) within 14 days of the signing of the Provisional S&P. A further deposit is payable to take the total deposit amount to 10% of the agreed (i.e. if the initial deposit was 3% then the additional deposit will be 7%). Therefore, in the Provisional Sales & Purchase Agreement both parties must confirm the date.
  3. Setting Final Completion date: The Final Completion Date is flexible, but 3-4 weeks after the signing of the Formal S&P is usually considered a reasonable amount of time. A total of 6 weeks from Provisional S&P to Completion is enough to complete most mortgages. The Purchaser's bank should advise him on this.
  4. Business Day: Get out your calendar! Completion date must be on a business day.
  5. Identification: Each party should provide the other with a signed photocopy of their HK I.D. card. This is not a legal requirement, but is good practice. If the other party is a company, please request a copy of their Business Registration (B.R.) document and use of company chop (ink stamp) upon signing.

N.B. It is possible for the parties to go straight to a Formal Sale & Purchase Agreement, however it is standard practice and recommended that a Provisional Agreement is entered into first. The Formal is a much more complex document and takes much more time for your lawyers to ratify, so the Provisional allows both parties to agree on the principal terms in a time

  • Purchasers Applying for Mortgage: As the purchaser requires a signed Provisional Agreement to get a mortgage application underway. It is best to submit your signed Provisional Agreement to your preferred mortgage bank as soon as possible.
  • Buyer's Costs: Other costs are primarily Stamp Duty, a tax which ranges from HK$100 to 4.25% of the purchase price depending on the value of the transaction; and standard legal costs. There are no agency fees, normally 1% of the purchase price, for a ZAP purchase transaction,
    Update: The HK Government recently introduced a Special Stamp Duty (SSD) applicable to residential properties purchased on or after 20 November 2010. If a property acquired on or after that date is sold within 24 months both Seller and Buyer are held jointly and severally liable for the SSD, unless otherwise agreed.
    - In practice one would expect the Seller to bear this burden. Please consult with your lawyer before signing to make sure this does not apply to the property you are interested in.
  • Your lawyer will guide you through the remaining steps including the Formal S&P, communication with banks, and finally handing over the keys.
  • Final Inspections: It is recommended the purchaser saves one visit to the day before or day of completion to ensure everything is in order before the final balance is paid.
  • Hand Over: This can either be done in person or the lawyer can receive the keys from the seller if you desire.

PART 1: Put Your Property On The Market With ZAP

  • Advertise / Post Your Property on ZAP for FREE: Simply upload your property details a brief description and photos on ZAP for FREE by clicking here. Buyers will contact you via ZAP's secure email portal without seeing your email address and it's your choice to reply.

  • Deciding on Your Asking Price? As well as comparing your property with the market in general, ZAP recommends contacting a number of banks by phone or email to ask for a real time valuations. ZAP's Mortgage Centre has conveniently put all major bank hotlines and eamil in one place to make your valuation search as easy as possible. Remember to contact at least a few as valuations can differ substantially.

  • Quick Tips When Showing Your Property:
    • Make sure your property is clean and tidy
    • Have an asking price in mind and also a bottom price in mind before hand
    • Highlight to potential buyers what is included and what is not included in the price e.g. car park
    • Introduce the benefits of the area and the building
    • Highlight the advantages of your property for example storage space, new fittings etc
  • Improve Your Chances of Being Contacted By Potential Tenants:
    • After you have advertised your property on ZAP select the link to your property and copy & paste it in your Facebook status
    • "Like" your property on Facebook
    • Use ZAP's "Send To Friend" function to email your property

ZAP's approach offers much safer transactions than agents transactions. Before anything is signed with a potential buyer ZAP advocates introducing a lawyer to the process and centralizing the transaction around a lawyer who will handle the entire transaction at a fraction of the cost compared to agents and provide unbiased advice! That's right a person with years of legal training and an oath to uphold will advise and take users through all the steps for a lot less than an agent. In fact even if you are using an agent to buy a property you are required by law to have a lawyer represent you, so why not simply use them for the whole process?

Need a Lawyer? ZAP has an independent panel of lawyers which you can choose from and will assist you through the property transactions. Please note ZAP does not accept any commission or payment from lawyers on our panel

Once you have a lawyer their first step at this stage is to inspect the Land Search to verify title and ensure there are no legal charges on the property or the building it is in.

Seller's costs: As it is common practice in Hong Kong for only the purchaser to pay the stamp duty for a Sale & Purchase Transaction therefore as a seller in ZAP transaction your costs are just standard legal costs which are much less than standard agency fees and commissions.

If both parties are agreed on terms and you have been given the green light by your lawyer after inspecting the property and Land Search, then you're ready to enter into a Provisional Sale & Purchase Agreement.

ZAP has a standard Provisional Sale and Purchase agreement, approved by our panel of lawyers. This is available below for free or simply ask your lawyer to supply you with one.

Click here to download a Provisional Sales & Purchase Agreement

Your lawyer will help you with this but below are some notes on filling in a Provisional S&P:

  1. Deposit Cheque: The signing of a Provisional S&P should be accompanied by an initial deposit cheque, normally 3% of the agreed purchase price (but can be in the region of 2-5% if the parties so desire). It is always safest to make the cheque out to the Seller's appointed lawyer. This is a must if the seller has an outstanding mortgage on the property, but is good practice even if this is not the case.
  2. Setting Formal S&P date: The parties must sign the Formal Sale and Purchase Agreement (Formal S&P) within 14 days of the signing of the Provisional S&P. A further deposit is payable to take the total deposit amount to 10% of the agreed (i.e. if the initial deposit was 3% then the additional deposit will be 7%). Therefore, in the Provisional Sales & Purchase Agreement both parties must confirm the date.
  3. Setting Final Completion date: The Final Completion Date is flexible, but 3-4 weeks after the signing of the Formal S&P is usually considered a reasonable amount of time. A total of 6 weeks from Provisional S&P to Completion is enough to complete most mortgages. The Purchaser's bank should advise him on this.
  4. Business Day: Get out your calendar! Completion date must be on a business day.
  5. Identification: Each party should provide the other with a signed photocopy of their HK I.D. card. This is not a legal requirement, but is good practice. If the other party is a company, please request a copy of their Business Registration (B.R.) document and use of company chop (ink stamp) upon signing.

N.B. It is possible for the parties to go straight to a Formal Sale & Purchase Agreement, however it is standard practice and recommended that a Provisional Agreement is entered into first. The Formal is a much more complex document and takes much more time for your solicitors to ratify, so the Provisional allows both parties to agree on the principal terms in a time

  • Your lawyer will guide you through the remaining steps including the Formal S&P, communication with banks, and finally handing over the keys.
  • Final Inspections: It is recommended the purchaser saves one visit to the day before or day of completion to ensure everything is in order before the final balance is paid.
  • Hand Over: This can either be done in person or the lawyer can pass the keys to the buyer if you desire.

Step 1: Put Your Property On The Market With ZAP

  • Advertise / Post Your Property on ZAP for FREE: Simply upload your property details, a brief description and photos on ZAP for FREE by clicking here. Tenants will contact you via ZAP's secure email portal without seeing your email address and it's your choice to reply.

    Deciding on your Rental Price? A good start is to find out what similar properties in your building or estate have recently been rented for in order to give you a more realistic price. . If you cannot find any information on the particular building ZAP suggests you look at rental price per square foot in the surrounding area.

    Inclusive/Exclusive Rent: Once you have decided what your asking rent is going to be, you need to decide whether that rent is inclusive or exclusive of management fees, government rent or rates. N.B. Inclusive rental agreements are the norm nowadays.
  • Quick Tips When Showing Your Property:
    • Make sure your property is clean and tidy
    • Have an asking rent price in mind and also a bottom price in mind
    • Highlight to potential tenants what is included and what is not included in the price e.g. car park
    • Introduce the benefits of the area and the building
    • Highlight the advantages of your property for example storage space, new fittings etc
  • Improve Your Chances of Being Contacted By Potential Tenants:
    • After you have advertised your property on ZAP select the link to your property and copy & paste it in your Facebook status
    • "Like" your property on Facebook
    • Use ZAP's "Send To Friend" function to email your property

Commercial Tenancy Agreements (less than 3 years in duration) are not required to be legally registered as a charge on your property. If it is less than 3 years you can in theory do without legal assistance, however there are still missteps that can be made and as always the safest way to proceed is by seeking legal advice and paying a lawyer to handle the transaction. After all one of the benefits of a non-agent transaction is that you may feel more able to direct a portion of what you have saved to having a lawyer look after your interests. If the Tenancy is 3 years in duration or more, you will need a lawyer to legally register the charge in any event.

Advantage of using a Lawyer for Rental

Disadvantage of using a Lawyer for Rentals

Safer transaction

Even if much less than agency fees you have to pay lawyers' fees

All the process will be taken care of on your behalf including processing the Stamp Duty

You have to visit the Revenue Department to pay Stamp Duty and finalize contract - This is not difficult

Option A: Use a Lawyer

If you have limited experience in property then ZAP advocates introducing a lawyer to the process and centralizing the transaction around a lawyer who will handle the entire transaction at a fraction of the cost compared to agents and provide unbiased advice! That's right a person with years of legal training and an oath to uphold will advise and take you through all the steps for a lot less than an agent.

Option B: Proceed Without Using A Lawyer

If you have experience or have a limited budget rental transactions (less than 3 years in duration) in Hong Kong can and do take place without formal legal assistance. However, there are a number of things you need to be aware of if you do. ZAP highlights the key points below but for official information please visit HK Government or the Estate Agent Authority websites

  • Agreeing on Principle Terms:
    1. Rent Inclusive or Exclusive of? Management fees, carpark etc?
    2. Duration of the Tenancy: A Commercial Residential Tenancy in HK comprises of a two year term, and often (but not always) contains an option to break after 14 months by giving at least two months advance written notice (ie a two month notices given at the end of the 12th month of the tenancy). However, the parties are at liberty to agree on whatever tenancy duration they see fit, with or without a break clause. See our FAQ for Tenancies of three years or more.
  • Rent free periods: Are always subject to negotiation, but it is not uncommon for a Tenancy Agreement to include a few days to a week to allow for a moving-in period for the Tenant. Rent free periods can be longer than this depending on what the parties negotiate.
  • Deposit: It is common for the future tenant to provide consideration upon entering a Tenancy Agreement, usually in the region of one month. A Landlord will also normally require a security deposit equivalent to 1, 2 or 3 months rent which he will hold for the duration of the tenancy. Rent is ordinarily payable at the beginning of each month, therefore if I security deposit of 2 months has been agreed, the Tenant should pay the Landlord 3 months rent in total (inclusive of any initial deposit paid upon entering into the Tenancy Agreement) before taking possession of the property.
  • Other terms to consider:

    Who is responsible for upkeep of the property? - An occasional grey or unattended to area. Parties may agree however they desire on these issues, but ZAP's opinion is as follows:
    • External condition: Such as building issues, common areas, and structural issues should always be the responsibility of the Landlord or Building Management (supported by common law).
    • Internal condition: ZAP suggests that it is equitable for the Landlord to be responsible for the internal condition as well e.g. plumbing, appliances and fixtures that would be expected to outlast the duration of the Tenancy, unless it is due to the Tenant's own negligence or being the direct cause of the damage.
    • Inventory List: To protect both parties it is advisable to in a comprehensive list of the fittings, electrical appliances and furniture if any that are supplied with the property
    • Subletting: The Tenancy Agreement should clearly state whether the Landlord will allow the tenant to sublet the rental property.

If you plan to appoint a lawyer, they will be able to provide you with a Tenancy Agreement. ZAP also provides a free standard Tenancy Agreement that endeavours to be equitable and fair to both parties. In the absence of a mutual Formal Tenancy Agreement, the Landlord should normally provide the Formal Tenancy Agreement.

Transaction using a Lawyer for Rental

Transaction NOT using a Lawyer for Rentals

Lawyer's fees for processing Tenancy Agreements start at $2~$3,000 and often scale higher depending on the value of the transaction. Expected services:

The steps required to successfully execute a Rental Transaction on your own are:

Carry out the Land Search

Sign a Formal Tenancy Agreement after carrying out a Land Search and agreeing on terms.

Execute the agreement and advise on terms

After signing a Tenancy Agreement the agreement must be 'stamped'. Stamp duty is a one-time tax payable to HK's Inland Revenue Department and is required by law. The cost of Stamp Duty is usually split equally between both parties, therefore it only requires one party to carry it out. ZAP suggests the Landlord may be most suited to handling this. Go to the Government guidelines on Stamp Duty in HK including how to handle them online.

Process and pay the Stamp Duty for the agreement (referred to as 'stamping' the agreement), CR 109 form if required, and other matters.

If your property is subject to a mortgage loan, most mortgage contracts require that you seek approval from the mortgage bank for approval to let the property. Not all agreements necessarily have this, so it is up to the Landlord / Tenant to decide whether that is required

Notes:

  • Stamp Duty: If the Stamp Duty is not paid, the document cannot be registered in the Land Registry, nor can it be received in evidence in any court proceedings (except criminal proceedings and civil proceedings taken by the Collector of Stamp Revenue to recover Stamp Duty). There is also a late payment penalty for failing to pay the stamp duty on the due date.
  • FORM CR 109: The Landlord of a commercial tenancy is required to lodge a Form CR 109 (Notice of New Letting or Renewal Agreement) with the Commissioner of the Rating and Valuation within one month of the execution of the Tenancy Agreement for his endorsement. Without a Form CR 109 endorsed by the Commissioner of Rating and Valuation, a Landlord is not entitled to maintain an action to recover rent from the Tenant. It is therefore important for the Landlord that a Form CR 109 is lodged with the Commissioner of the Rating and Valuation within one month of the execution of a Tenancy Agreement. The form requires the Landlord to supply information on: term of the tenancy, the monthly rental, whether any rent-free period has been given, who will pay the rates, government rent, management fees of the property etc. After endorsement by the Commissioner of Rating and Valuation one copy of the form will be returned to each of the Landlord and the Tenant. If it is submitted after one month, a penalty of $310 will be payable by the landlord.
  • Things to consider before choosing your Tenant: A Landlord should make sure the tenant has the financial means to fulfill the Tenancy Agreement. The Landlord has the right to ask the Tenant about their occupation or financial means, and may go as far as to ask the tenant to provide proof in this regard.

N.B. These guidelines are for reference only and should not be relied upon as legal advice.
Check out the Government's official guide for comparison: Leasing out a Commercial Property

Once all legal formalities have been completed the next step is arrange for keys to be exchanged. This can either be done in person or via either the Landlord's or Tenant's lawyer.

PART 1: Finding a Property

  • Property Search: Use ZAP's property search to find properties that meet your requirements. Contact Landlords directly to arrange viewings using ZAP's secure emailing system and wait for a reply.
  • Simple Tools: ZAP has a few simple tools to make your search and inspections easier. If you find multiple properties you are interested in, add them to your Interest Basket to view them later in one place (only registered users can use the Interest Basket, but registration is FREE and easy). Once in the Interest Basket you can then print inspection itineraries and comment forms for the properties you have selected, as well as see an auto-populated Google map view of those properties all together.
  • Do Your Homework: Caveat Emptor means that as a Tenant you accept the property as is when you rent it. ZAP recommends doing some basic due diligence once you are interested in a property including checking the building's notice boards or speaking to the building management company to ask if there's anything you should know about such as an upcoming renovation project.
  • Quick Tips When Negotiating and Viewing A Property:
    • Try and view the property more than once preferably in the day and possibly in the evening
    • Ask what is included in the rental price for example a car park, roof top etc
    • Look in the corners of the windows and the ceiling to see if there are any water marks or water damage?
    • Are you satisfied with noise levels for neighbours or the road?
    • Are pets allowed in the building?

Commercial Tenancy Agreements (less than 3 years in duration) are not required to be legally registered as a charge on your property. If it is less than 3 years you can in theory do without legal assistance, however there are still missteps that can be made and as always the safest way to proceed is by seeking legal advice and paying a lawyer to handle the transaction. One of the benefits of a non-agent transaction is that you may feel more able to direct a portion of what you have saved to having a lawyer look after your interests. If the Tenancy is 3 years in duration or more, you will need a lawyer to legally register the charge in any event.

Advantage of using a Lawyer for Rental

Disadvantage of using a Lawyer for Rentals

Safer transaction and peace of mind

Lawyer's fee, even if much less than agency fee. For more information click here.

All the process will be taken care of on your behalf including processing the Stamp Duty

You have to visit the Revenue Department to pay Stamp Duty and finalize contract - This is not difficult

Option A: Use a Lawyer

If you have limited experience in property then ZAP advocates introducing a Lawyer to the process and centralizing the transaction around a lawyer who will handle the entire transaction at a fraction of the cost compared to agents and provide unbiased advice! That's right a person with years of legal training and an oath to uphold will advise and take users through all the steps for a lot less than an agent.

Option B: Proceed Without Using A Lawyer

If you have experience or have a limited budget rental transactions in Hong Kong can and do take place without formal legal assistance. However, there are a number of things you need to be aware of if you do. ZAP highlights the key points below but for official information please visit HK Government or the Estate Agent Authority websites

Below is a free generic 'Offer Letter', which is the format most often used for the prospective tenant to submit their 'subject to contract' (i.e. non-binding) offer terms for the premises to the landlord of the property. A commercial landlord will normally then counter with their own terms using their own provisional or formal tenancy agreement.

Offer Letter

 

NOTES:

  • Land Search: The prospective Tenant should carry out a Land Search to verify that the Landlord is the owner of the property and therefore has the right to rent the property to the Tenant.
  • Agreeing on Principle Terms:
    1. Rent Inclusive or Exclusive of? Management fees, carpark etc?
    2. Duration of the Tenancy: A standard Commercial Tenancy in HK comprises a two year term, and often (but not always) contains an option to break after 14 months by giving at least two months advance written notice(ie a two month notices given at the end of the 12th month of the tenancy). However the parties are at liberty to agree on whatever tenancy duration they see fit, with or without a break clause. See our FAQ for Tenancies of three years or more.
  • Rent free periods: Are always subject to negotiation, but it is not uncommon for a Tenancy Agreement to include a few days to a week to allow for a moving-in period for the Tenant. Rent free periods can be longer than this depending on what the parties negotiate.
  • Deposit: A Landlord will normally require a security deposit equivalent to one, two or three months rent which he will hold for the duration of the tenancy. Rent is ordinarily payable at the beginning of each rental month. Therefore, if a security deposit of two months has been agreed, the Tenant should pay the Landlord three months rent in total (inclusive of any initial deposit paid upon entering into the Tenancy Agreement) before taking possession of the property.
  • Other terms to consider:

    Who is responsible for upkeep of the property? - An occasional grey or unattended to area. Parties may agree however they desire on these issues, but ZAP's opinion is as follows:
    • External condition: Such as building issues, common areas, and structural issues should always be the responsibility of the Landlord or Building Management (supported by common law).
    • Internal condition: ZAP suggests that it is equitable for the Landlord to be responsible for the internal condition e.g. plumbing, appliances and fixtures that would be expected to outlast the duration of the Tenancy, unless it is due to the Tenant's own negligence or being the direct cause of the damage.
    • Inventory List: To protect both parties it is advisable to do a comprehensive list of the fittings, electrical appliances and furniture if any that are supplied with the property
    • Subletting: The Tenancy Agreement should clearly state whether the landlord will allow the tenant to sublet the rental property or not.

If you plan to appoint a lawyer, they will be able to provide you with a Tenancy Agreement. ZAP also provides a free standard Tenancy Agreement that endeavours to be equitable and fair to both parties. In the absence of a mutual Formal Tenancy Agreement, the Landlord will normally provide the Formal Tenancy Agreement.

Transaction using a Lawyer for Rental

Transaction NOT using a Lawyer for Rentals

Lawyer's fees for processing Tenancy Agreements are HK$3,000+ for commercial transactions and often scale higher depending on the value of the transaction and the complexity of the lease. Expected services include:

The steps required to successfully execute a Rental Transaction on your own are:

Carry out the Land Search

Sign a Formal Tenancy Agreement after carrying out a Land Search and agreeing on terms.

Execute the agreement and advise on terms

After signing a Tenancy Agreement the agreement must be 'stamped'. Stamp Duty is a one-time tax payable to HK's Inland Revenue Department and is required by law. The cost of Stamp Duty is usually split equally between both parties, therefore it only requires one party to carry it out. ZAP suggests the Landlord may be most suited to handling this. Go to the Government guidelines on Stamp Duty in HK including how to handle them online.

Process and pay the stamp duty for the agreement (referred to as 'stamping' the agreement), CR 109 form if required, and other matters.

If your property is subject to a mortgage loan, most mortgage contracts require that you seek approval from the mortgage bank for approval to let the property. Not all agreements necessarily have this, so it is up to the Landlord / Tenant to decide whether that is required

Notes:

  • Stamp Duty: If the Stamp Duty is not paid, the document cannot be registered in the Land Registry, nor can it be received in evidence in any court proceedings (except criminal proceedings and civil proceedings taken by the Collector of Stamp Revenue to recover stamp duty). There is also a late payment penalty for failing to pay the Stamp Duty on the due date.
  • FORM CR 109: The Landlord of a Commercial Tenancy is required to lodge a Form CR 109 (Notice of New Letting or Renewal Agreement) with the Commissioner of the Rating and Valuation within one month of the execution of the Tenancy Agreement for his endorsement. Without a Form CR 109 endorsed by the Commissioner of Rating and Valuation, a Landlord is not entitled to maintain an action to recover rent from the Tenant. It is therefore important for the Landlord that a Form CR 109 is lodged with the Commissioner of the Rating and Valuation within one month of the execution of a Tenancy Agreement. The form requires the Landlord to supply information on: term of the tenancy, the monthly rental, whether any rent-free period has been given, who will pay the rates, government rent, management fees of the property etc. After endorsement by the Commissioner of Rating and Valuation one copy of the form will be returned to each of the Landlord and the Tenant. If it is submitted after one month, a penalty of $310 will be payable by the Landlord.

N.B. These guidelines are for reference only and should not be relied upon as legal advice. Check out the Government's official guide for comparison: Leasing a Commercial Property

Once all legal formalities have been completed the next step is arrange for keys to be exchanged. This can either be done in person or via either the Landlord's or Tenant's Lawyer.