Panel Wants Cap On Rent Hikes For Subdivided Flats

A government task force recommended on Wednesday that authorities introduce standard contracts for subdivided flats, and cap rent increases to 15 percent, in order to better protect the poor families who live there.

Government figures suggest there are around 100,000 subdivided flats across Hong Kong, providing cramped living quarters for around 226,000 grassroots residents. Many of these cubicles are located in older buildings, some of which are more than 50 years old.

After a year of study, the task force ruled out regulating the initial rent landlords can charge tenants – something critics say would have prevented landlords from hiking up rents to counter the task force’s proposals.

The chairman of the task force, William Leung, explained that it would be “infeasible” to devise an objective and administratively easy mechanism that could fairly determine the initial rent.

“Using administrative means to reset the initial rent of each and every [subdivided unit] in Hong Kong is not only bound to be administratively costly and burdensome, but would inevitably create numerous disputes between the landlord and tenant,” the report said.

The task force’s proposed “standard tenancy agreement” has a fixed period of two years, which can be renewed once. Rents can be raised up to 15 percent, but the actual percentage will be determined by changes in the private domestic rents index.

After four years, the landlord and tenant would be free to negotiate and enter into a new agreement.

Under this contract, only tenants would have the power to terminate the lease. Tenants would only need to pay the deposit, the rent and utility charges – but no other charges, such as maintenance fees.

The panel said the fundamental way to solve the issue of subdivided flats is to increase the supply of land and housing. It urged the government to expedite the construction of public housing and develop transitional housing.