An Expert Step-by-Step Guide to Leasing a Flat in Hong Kong
If you’re in the market wondering how to rent an apartment in Hong Kong, understanding the essential steps in this rental guide can help you find the perfect home in HK.
Leasing, or renting, a home in Hong Kong is as straightforward and transparent a process as buying one is. You just won’t need (in most cases) a solicitor or financing options.
The luxury rental market is concentrated in three key districts: The Peak, Mid-Levels, and Island South, which includes Repulse Bay, Tai Tam, and Stanley. There are, of course, luxury pockets always popping up in other parts of the city. Lantau’s Cheung Sha area is developing an upscale sub-market, and if you prefer an urban lifestyle there are plenty of high-spec properties to choose from in locations as far-flung as Kennedy Town, North Point, and Ho Man Tin. But as luxury has increasingly come to mean private outdoor space, greener surroundings, and peaceful, panoramic views the former neighbourhoods still dominate.
The first few steps anyone in the market for a rental property should take are very similar to the first steps anyone in the market for a purchase will be taking. The difference between renting and buying an apartment is that there is no need to make a significant down payment or to secure financing, but there is still a process to be aware of. Habitat Property has compiled a series of tips that can help you secure the best apartment for your needs in Hong Kong.
Featured Listing: Repulse Bay Apartments
Step 1: Determine why you’re leasing rather than buying, and what you need
There are as many reasons to lease a flat instead of purchasing one as there are kinds of tenants. Potential tenants may be new to the city and prioritising work before focusing on long term living. There could be a change in the size and dynamic of the family at home, making the current space inappropriate. Maybe you do own a flat, and you’ve committed to substantial renovations and need to move out. Maybe you’ve taken a survey of market conditions and have decided it is, in fact, time to buy – but you’d like to take some time looking around.
Hong Kong also has Stamp Duty barriers to buying for non-residents which can make it prohibitive – so most residents new to the city often prefer rental as opposed to ownership.
Whatever the reason, any decision to lease a flat should begin with a good understanding of how you want to live. Are you an individual that likes to entertain? Are you a newlywed with plans to have a family – or a family with ageing parents? What do you like to do with your leisure time? Would you truly use clubhouse facilities? Do you cook? Love entertaining? Do you have a pet? These are just some of the factors that determine what you need from your lease.
These factors will also help you determine how much space you need. The two important types of measurements used in Hong Kong are saleable area vs gross area. Saleable area refers to the actual usable area within a property, including the interior space and any balconies or terraces. It does not include common areas such as hallways or staircases. On the other hand, gross area includes the saleable area plus a percentage of the common areas, typically around 10%. This means that the gross area will always be larger than the saleable area. Both measurements are important to consider when renting a property, as they can affect the overall size and value.
Featured Listing: Branksome Grande
Step 2: Figure out your budget
Hong Kong is one of the most expensive cities to rent in globally. Even though the average cost of rent has softened recently, Hong Kong can shock many newcomers as it's much more expensive and generally smaller in size than other international cities such as NY, London, or Sydney.
Many of the aforementioned wants and needs will contribute to determining your budget. Calculate what you’re comfortable spending each month, and bear in mind amenities such as clubhouses, outdoor space, and rooftops demand a rental premium. Additionally, as with purchasing, two bedrooms and a terrace in a newer building will cost much more in Mid-Levels and Southside than it will in Tai Wai or Tseung Kwan O. In addition, consider factors such as rental and security deposits for your first several months.
Featured Listing: Burnside Estate
Step 3: Engage your Property Agent
Having an experienced Estate agent is key. Habitat’s professionals all have extensive local expertise and understand Hong Kong’s constantly evolving property market. Our agents can help not only with access to a broad selection of available property listings and in negotiations but also with language and cultural quirks that can be difficult to navigate for newcomers, as well as with pre-occupancy due diligence and post-occupancy support.
Having a knowledgeable property agent familiar with both market conditions and major landlords can be an invaluable resource when it comes to final decisions and negotiations. Agents in Hong Kong must be licensed by the Estate Agents Authority (EAA).
Featured Listing: Banoo Villa
Step 4: Where to Live? Which Neighbourhoods?
Your agent will take you out to check different neighbourhoods and start to give you a feel for different property types. Hong Kong has a real diversity of neighbourhoods. Areas like the Mid-levels are densely populated with high-rise buildings while the Peak and South Side have many townhouse complexes with facilities and larger outside spaces such as terraces. There’s also a diverse range of property types from colonial low-rise buildings to newer high-rise buildings with a full range of amenities and clubhouse facilities such as pools, gym, and tennis courts. Features such as gardens are very rare in Hong Kong and can often really increase the price.
Looking around will help you narrow down where you want to live. This will be influenced by budget, lifestyle choices, and other factors such as if you have children and which schools your children will be attending. In Hong Kong, the cost to rent in areas with desirable schools is higher than average.
Featured Listing: The Repulse Bay
Step 5: Property Viewings
Your Habitat Property agent will arrange property viewings based on your preferences and which neighbourhoods you prefer. Nothing will tell you more about a flat’s fit for you than actually seeing it. Your agent will accompany you to each viewing, providing insights and answering any questions you may have. Take this opportunity to thoroughly inspect the property, checking for any damages or maintenance issues. Take time to inspect the amenities and facilities on offer. Communicate your feedback to your agent to ensure they understand your preferences and can continue to narrow down your search.
Once you’ve viewed and selected a flat, your agent will help you submit an offer.
Featured Listing: L'Harmonie
Step 6: Submitting an Offer
If you find an apartment that meets your requirements, you can submit an offer through your Habitat agent. The agent will negotiate with the landlord on your behalf, discussing the rental price, lease duration, and any special conditions such as rent-free or incentives etc. Be prepared for potential counteroffers and rely on your agent's negotiation skills to secure the best possible terms. The Hong Kong market can be fast moving so be prepared to move quickly.
Standard tenancy agreements are normally fixed at two years – there is generally the option to break the lease after 12 months by giving 2-3 months’ notice. Sometimes the break clause is for the tenant only and sometimes is 2-way for both the landlord and the tenant. Your agent will walk you through what is standard. Some corporate landlords may not allow any break clause unless you are leaving HK or lose your employment (which is referred to as a diplomatic break clause)
Your agent will also negotiate and itemise any work that needs to be completed before the lease commences such as painting, servicing air-conditioning etc.
In Hong Kong, the gross rental figure is made up of the rental plus the monthly Government Rates and the monthly building management fees.
Featured Listing: Aigburth
Step 7: Paying the Deposit
In Hong Kong, it is customary to pay the first month's rental and a security deposit upfront. Upon agreement, the tenant will be asked to pay 1 month's rental as a holding deposit which is then used as the first month's rental.
In Hong Kong, the security deposit is typically equivalent to one to three months' rent and is payable upon the signing of the tenancy agreement. The security deposit is refundable at the end of the tenancy, subject to the condition of the apartment. Your property agent will guide you through the payment process and ensure that all necessary documentation is in order.
Featured Listing: The Repulse Bay
Step 8: Paying the Stamp Duty
As a rule, the standard practice for rental agreements in Hong Kong is for the landlord and the tenant to divide the costs related to a rental agreement equally. Those costs normally include stamp duty. The total stamp duty paid upon a lease agreement varies depending on the rental amount. The cost is shared equally between the tenant and the landlord.
Step 9: Agent’s Fee
It is standard to pay agency fees on the signing of a rental by both the tenant and the landlord. Standard fees are calculated at half (50%) of one month’s rental and are due upon the signing of the tenancy agreement.
Step 10: Move in and inspection
Before moving in, conduct a thorough inspection of the apartment with your property agent. Take note of any existing damages or issues and document them with photographs or a written inventory. This will protect you from being held responsible for pre-existing problems when you move out.
Featured Listing: Branksome Grande
Now that you’ve done the inspection and paid all the deposits, you’ll get the keys to your new home.
Congratulations, you’re now a Hong Kong tenant.
By following the steps in this rental guide and working with a property agent, you can navigate the process of renting an apartment in HK with ease and confidence. Remember to communicate openly with your agent, ask questions, and rely on their expertise to find the perfect home for your needs.