1. How am I, as a landlord, affected by the changes in July 2004?

A major impact of the amendment on a tenancy of a domestic property is that it removes the security of tenure provisions . In respect of non-domestic properties, the statutory minimum length of notice to terminate a tenancy is removed. In other words, for landlords the new law offers more flexibility in negotiating with tenants about whether existing tenancies will be renewed.

Tenancies of domestic properties

For tenancies of domestic properties that were created on or after 9 July 2004, the parties can freely negotiate and agree between themselves on how the tenancy will be terminated. In the absence of any contractual agreement, a fixed term domestic tenancy will end upon expiry, and a periodic tenancy will be terminated by a notice to quit at the length of a full tenancy period.

In the case of tenancies of domestic properties that were in existence before 9 July 2004, such tenancies can only be terminated by mutual agreement or by a Transitional Termination Notice (TTN). For a TTN to be issued by the landlord, it must be served on the tenant not less than 12 months before the intended date of termination. That is to say, the tenant is in effect granted security of tenure of another 12 months. However, a landlord who requires the property for self-occupation may apply to the Land Tribunal for possession of it upon expiry of the existing tenancy whether or not the TTN has been served (see the judgment from the case of Simon John Cox v Paul Desmond Scanlon ) . An important note is that a person who has successfully obtained an order for possession on the ground of self-occupation cannot let, sell, transfer, or part with possession of the premises with others (except for that person's immediate family members such as his/her spouse and children) within 24 months from the date of the order unless the Lands Tribunal has given its prior consent.

It should also be noted that a TTN is not required in the following cases:

(a) there was a change of any terms of the tenancy on or after 9 July 2004(see the court judgment below);
(b) the landlord and tenant, on or after 9 July 2004, agreed on another period of notice of termination; or
(c) the tenancy was assigned to a new tenant on or after 9 July 2004.

The judgment from the case of Fubon Bank (Hong Kong) Ltd v Welform Ltd may help illustrate item (a) above. In this case, the subject tenancy commenced on 1 December 2002 and expired on 30 November 2004 . The Lands Tribunal found out that there was an agreement for a 3-month extension period from the original expiry of the written tenancy agreement. Such an alteration to the original term of the expired tenancy was made after 9 July 2004 . On this basis, and having regard to Section 5(4) of the Landlord and Tenant (Consolidation) Ordinance (please refer to the "note" under section 115 of the Ordinance ), the landlord was therefore no longer required to serve onto the tenant a Transitional Termination Notice upon expiration of the extension period. Also, since the extension period was for a period of a fixed term of 3-month but with no specific provision on the service of notice to quit, the court held that the fixed term should end upon expiry on the last day of the 3-month period and no further notice to quit from the landlord was required.

Tenancies of non-domestic properties

For tenancies of non-domestic properties that were created on or after 9 July 2004, the parties can freely negotiate and agree between themselves on how the tenancy will be terminated. In the absence of any contractual agreement, a fixed term tenancy will end upon expiry, and a periodic tenancy will be terminated by issuing a notice to quit at the length of a full tenancy period.

In cases of tenancies of non-domestic properties that were in existence before 9 July 2004, the parties can terminate the tenancy in accordance with the agreements that are stipulated in the tenancy document or as agreed between themselves. In the absence of any mutual agreement, a fixed term tenancy will end upon expiry, and a periodic tenancy will be terminated by issuing a notice to quit at the length of a full tenancy period.

If you have further questions regarding the above changes, please contact the Rating and Valuation Department.