Concrete Analysis | How estate agents and landlords should implement Hong Kong’s new tenancy control regime for subdivided units

The government has implemented a new tenancy control regime for subdivided units under Part IVA of the Landlord and Tenant (Consolidation) Ordinance, which came into effect on 22 January this year.

As estate agents may handle tenancies relating to units that are subject to Part IVA, the Estate Agents Authority (EAA) issued a practice circular setting out the relevant guidelines for estate agents to follow, which also came into effect on the same date as Part IVA.

Here I would like to bring to the attention of estate agents and the general public, particularly the landlords of subdivided units, some key points about the letting of these units. I hope that the landlords will understand more and cooperate with the estate agent accordingly.

First of all, about what types of buildings are under the new guidelines. Generally speaking, Part IVA covers subdivided units of domestic or composite buildings, and industrial or commercial buildings. However, squatters and New Territories Exempted Houses are not covered under Part IVA.

Secondly, please note the potential conflict of interest. When handling regulated tenancies of subdivided units, estate agents must disclose to the prospective tenants whether they act only for the landlord, only for the tenant, or for both the landlord and the tenant. In the case of dual agency, estate agents should disclose to the tenant and the landlord the respective amount or rate of commission or remuneration to be received separately from the relevant landlord and tenant.

If an estate agent holds himself out as an estate agent but he is also the landlord or the representative of the landlord, he must inform the prospective tenant of such a fact.