Understanding Rental Costs and Payment Responsibilities

Many tenants believe that renting a property only involves paying rent on time, but in reality, there are many additional costs, such as management fees, internet fees, stamp duty, and utility bills (water, electricity, gas). It is important to clarify these details with the landlord when signing the lease to ensure both parties are aware of who is responsible for which payments, to avoid future disputes. 

Under the current system, once a rental agreement is signed, it must be stamped (commonly referred to as paying stamp duty) for the contract to be legally binding and to protect both the tenant and the landlord. Stamp duty is calculated based on the lease term, with rates ranging from 0.25% to 1%, depending on the length of the agreement. 

Typically, the stamp duty is split equally between the tenant and the landlord, but the final arrangement depends on their agreement. For example, for a unit with a monthly rent of HK$12,000 and a 24-month lease, stamp duty at 0.5% would be HK$1,440. If shared equally, each party would pay HK$720. 

As for utility bills like water, electricity, gas, and internet, these are usually not included in the rent and are the tenant's responsibility. When utilities are not included, the lease should clearly outline this, and tenants should confirm how these bills are paid—whether to the landlord or directly to the service provider.

Some landlords may wonder if they should transfer the utility accounts to the tenant’s name, since the tenant is responsible for paying them. It’s generally advisable to transfer the accounts when renting out the property, as utilities are registered under personal names. If the tenant fails to pay, the service provider will hold the tenant responsible, not the landlord. 

So, how do you transfer the accounts? Both the landlord and tenant, or their agent, can initiate the transfer. This can be done online, by mail, fax, or in person at a service center. Required documents include the signed lease agreement, the property’s full address, and identification documents.

It’s important to note that setting up a utility account requires a deposit. When the account is closed, any outstanding balance will be deducted from the deposit, and the remainder will be refunded to the registered user. The water deposit is HK$400, the gas deposit is HK$600, and the electricity deposit varies depending on the size of the property. 

To minimise rental disputes, it’s important for landlords and tenants to maintain clear records. Tenants are advised to request copies of the utility bills from the landlord to verify the previous usage and ensure there are no outstanding payments, providing peace of mind during the tenancy.

Some landlords believe that by keeping the utility accounts in their name, they can prevent tenants from defaulting on rent by cutting off the utilities if rent isn’t paid. However, this is illegal and could violate the Landlord and Tenant (Consolidation) Ordinance. If found guilty, the first offense can result in a fine of up to HK$500,000 and imprisonment for up to 12 months.

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