Tips for Renting Apartment! 5 Major Considerations for Renting | Complete Guide to Renting Commission and Additional Expenses

Feeling perplexed about renting an apartment? In this article, we will introduce a complete guide of renting! As it's difficult to own a flat in Hong Kong, many people may then decide to rent an apartment. However, the rental process can be complicated, and signing a lease is a commitment that lasts for years, which can be daunting. Let's understand the 5 major considerations for renting an apartment, as well as the calculation methods for renting commission and stamp duty. Pay attention if you are going to rent an apartment in Hong Kong!

Renting Apartment Tips! Renting vs. Buying: 3 Major Benefits

1. Lower Initial Cost
In general, tenants only need to prepay 2 months' rent as deposit and 1 month's rent in advance to the landlord, commonly known as "2+1". Tenants do not need to take responsibility for different housing expenses, including repair costs, maintenance fees, and appliance installation fees. This means that the budget requirement is lower compared to buying a property, resulting in a lower entry barrier.

2. High Flexibility for Renting
After the "fixed-term contract" period, tenants only need to give 1 month notice to terminate the contract in general. Therefore, tenants have the flexibility to move to their desired residence based on their financial situation, preferences, or other factors. This flexibility is higher compared to buying a property.

3. Flexible Asset Allocation
Since there is no down payment for renting an apartment, tenants can allocate their funds to different financial products. This is suitable for individuals with investment experience who can flexibly utilize their available funds.

Watch out! 5 Key Considerations for Renting

Renting Apartment Tip 1: Rental Listings
Rental listings in the market can be divided into direct listings from property owners and listings handled by real estate agents. While you can save the agent's commission fee by renting directly from landlord, you need to manage the complex rental procedures on your own, which may not be suitable for newbie. Therefore, it is recommended to engage professional agents regulated by the Estate Agents Authority (EAA) to oversee the process. If you found there is any misconduct behavior made by the real estate agent, you should promptly file a complaint with the relevant regulatory authorities.

Renting Apartment Tip 2: Viewing Apartment Smartly

1. Turn on all the faucets in the unit for one minute and check the water color, water pressure, and water volume, especially in older buildings.
2. Ensure that all power outlets are connected to electricity, and every switch for each outlet is functioning properly.
3. Check if the stove is functioning properly.
4. Open and close the doors and windows multiple times to check for its smoothness and tightness of the screw positions, window hinges, and waterproof seals.
5. Make sure the door locks are working correctly to avoid being too loose or too tight. Also, pay attention to the size of the gap after closing the door.
6. Pay attention to high-risk areas for water leakage, such as ceilings, air conditioners, wooden floors, and walls, to see if there are any bulges or signs of mold.
7. Check if the broadband service is available inside the unit. Some village houses may not have "Fibre-to-the-Home" Internet access.
8. Thoroughly inspect if there are any wood shavings near the door frame, as ant nests are often hidden inside the frame.
9. Pay attention to the cleanliness of the hallway, back stairs, and even the neighbors' doorsteps. As a straw shows which way the wind blows, you may understand the quality of the neighbors through the details.

Renting Apartment Tip 3: Building Facilities
Among the various considerations of renting, it's not just about the interior environment, the building facilities are equally important! For example, the amount of lifts, the attitude of the security guards, and the distribution of CCTV cameras are all important factors affecting the convenience and sense of security in living. If there are clubhouse facilities, it's advisable to visit them first to ensure that everything is functioning properly. If possible, observe the condition of the building and the maintenance schedule as well. With a well-maintained condition, you can live more comfortably and with peace of mind. Remember to pay attention to the list of renting apartment tips!

Renting Apartment Tip 4: Beware of the Hidden House Defects
What are "make-up" apartments? Beware of the units that attempt to hide the flaws with renovation and refurbishment, especially plumbing leakage problems. So be extra vigilant if you notice that the walls are freshly painted or any marks of renovation.

Renting Apartment Tip 5: Unit Orientation and Views
In terms of unit orientation, units facing the South is considered to be the most ideal direction generally, as it is usually warm in winter and cool in summer. If you come across a West-facing unit, you may need to rely heavily on air conditioning during the summer, which leads to an increased electricity expenses. Units facing the North are more prone to dampness and mold issues. In terms of views, it is better to avoid units near major traffic area, neon lightboxes, garbage rooms, cemeteries, and funeral homes, as they might come with hygiene and noise problems. Additionally, to avoid potential impacts on the views in the future, it is recommended to pay attention to nearby ongoing construction projects or other infrastructure developments.

Tips when Signing the Contract

1. Check the registration information of land records at the Hong Kong Land Registry
This step helps to confirm the identity of the property owner, to avoid someone impersonates the owner and disappears after receiving the deposit. The fee for each search is only $10, and you can either visit the office in person or via online. Therefore, it is important to check the land records at the Land Registry before renting a property. For details, please refer to the Land Registry website.

2. Tenancy Agreement Terms
In general, a residential tenancy agreement in Hong Kong is for 2 years, with no break clause in the first year and a break clause to allow either the landlord or the tenant to terminate the tenancy agreement by one-month notice in the second year. When the tenancy agreement expired after 2 years, you will need to sign a new tenancy agreement with the landlord.

3. Negotiate the rent-free period
Currently, there are no mandatory regulations regarding rent-free periods in Hong Kong. However, it is common for residential leases to include a rent-free period for around 7 to 14 days. Tenants can move in during the rent-free period, but landlords also have the right to not provide any rent-free period, so it is necessary to negotiate with the landlord in advance.

4. Clarify responsibility for expenses
The rent usually includes rates, government rent and management fees, and sometimes even water, electricity, and gas charges. However, if the lease explicitly states that water, electricity, and gas are not included, it is important to understand the calculation methods with the landlord and record the meter readings on the first day of the lease. You can also request for past receipts of water, electricity, and gas bills from the landlord, and carefully check the usage records to ensure that there are no outstanding debts. It is recommended to take meter readings every month and notify the landlord immediately if any abnormalities are found.

5. Renovations and built-in appliances
When renting a property, try to avoid any changes to the original decorations and built-in appliances of the property. If it is necessary to drill holes into the walls or change wallpapers, it is suggested to discuss with the landlord in advance and specify these details in the lease agreement.

Budget for Renting! How much commission is involved? How is the stamp duty calculated?

In addition to the monthly rent, the payment is usually made in the form of "two months' deposit + one month's rent + commission (half-month's rent)" when renting a property. To help you understand the rental budget better, let's take a look on below example.

If the rent is $20,000/month, the tenant need to pay below amount at once together with the commission:

Apart from the commission, many people may not understand about the stamp duty. Stamp duty is calculated based on the duration of the lease and is usually 0.25% to 1% of the annual rent or average annual rent. It is shared between the landlord and the tenant. The stamp duty must be paid to the Inland Revenue Department within 30 days after signing the lease agreement. It's important to note that stamp duty doesn't require mutual agreement, such that the lease agreement can be drawn up without including stamp duty. If the landlord refuses to pay the stamp duty, you can choose to pay it yourself, but you may not be able to recover the portion that the landlord should have paid.

If you have planned your monthly rent, commission, and stamp duty expenses, and you want to negotiate further, you can consider to pay full year rent upfront. However, if you are currently tight on cash but still want to prepay the rent to negotiate a lower rent with the landlord, you can consider applying for a low-interest personal loan from Promise. The loan process can be completed entirely online without visiting our branches^*. The interest is calculated on a daily basis, so you only need to pay interest for the number of days you borrow. There are no penalties or additional fees for early repayment, providing you with flexible solutions to your financial concerns. Click here to learn more about the latest loan offers.