LCQ3: Regulation of subdivided units
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Question:
Part IVA of the Landlord and Tenant (Consolidation) Ordinance (LTCO), which relates to tenancy control on subdivided units (SDUs), came into force in January last year. However, as at October 31 last year, the Rating and Valuation Department (RVD) had only processed 8 020 Notices of Tenancy, which is less than one tenth of the current number of about 100 000 SDUs. Moreover, the then Secretary for Transport and Housing undertook at the meeting of this Council on April 6 last year that, upon obtaining more information on SDUs in the 18 districts across the territory and releasing a full report in the first quarter of this year, the Government would consider publishing the relevant information on a monthly basis, and judge, after analysing the relevant data, whether to determine an initial rent for SDUs. In this connection, will the Government inform this Council:
(1) of the latest judgement regarding whether an initial rent for SDUs should be determined, and the timetable for setting an initial rent; how the authorities ensure that landlords of SDUs will, in accordance with the statutory requirements, submit their Notices of Tenancy to RVD within 60 days after the term of a "regulated tenancy" has commenced, and whether the authorities will take the initiative to conduct random checks;
(2) given that RVD indicated that as at September 30 last year, it had identified 470 cases of landlords of SDUs suspected of having violated the requirements under LTCO, of a breakdown by the nature of such cases; whether the authorities have assessed the effectiveness of the work of the dedicated enforcement and investigation task force, and whether the task force will carry out decoy operations to gather evidence; and
(3) as there are views pointing out that the Government must draw up a timetable and a roadmap for bidding farewell to SDUs to eliminate poor-quality SDUs first, and establish a licensing regime to improve the living environment of SDUs or assist in the transformation of SDUs, whether the Government will take on board the aforesaid views; if so, of the details; if not, the reasons for that?
Reply:
President,
Housing is of utmost concern to Hong Kong people. One of the focuses of the current term Government is to provide citizens with a better living environment. After consulting the Development Bureau as well as the Rating and Valuation Department (RVD), my consolidated reply to the question raised by the Hon Cheng is as follows:
Part IVA of the Landlord and Tenant (Consolidation) Ordinance (the Ordinance) to implement tenancy control on subdivided units (SDUs) has come into force since January 22, 2022. The Ordinance provides protection to SDU tenants in various aspects, which include four-year security of tenure; restricting the rate of rent increase on tenancy renewal by making reference to the rental index of private domestic properties and capped at 10 per cent; and prohibiting landlords from overcharging tenants for specific items such as water and electricity.
Pursuant to the Ordinance, a landlord must, within 60 days after commencement of the term of tenancy, submit a Notice of Tenancy (Form AR2) as per the statutory requirement to notify RVD of the particulars of the tenancy. If a landlord breaches the relevant requirement, he/she commits an offence and maybe prosecuted. As at December 31, 2022, RVD processed 10 578 Forms AR2. Since the Ordinance has come into force for just about a year, some landlords may not be aware of the relevant requirements.
In this connection, RVD has been proactive in identifying suspected offence cases and strengthening enforcement, as well as dedicating efforts to promote the Ordinance. In addition to following up on reported cases, RVD also proactively conducts home visits to SDUs in various districts. Furthermore, RVD has set up an enforcement and investigation task force and is in the process of hiring retired police officers to follow up on cases suspected of breaching the requirements under the Ordinance, as well as to actively explore different approaches for identifying suspected offence cases.
In addition, RVD has started a new round of promotion through different channels and means in recent months, such as television and radio announcements, as well as issuing letters to about 1 000 buildings (with a total of around 45 000 units) believed to have more SDUs to remind SDU landlords and tenants of the relevant requirements.
As at December 31, 2022, RVD identified a total of 1 098 cases of landlords suspected of breaching the Ordinance, which represents an increase of over 100 per cent as compared to the 467 cases in end September. 80 per cent of the cases (899 cases) are suspected of failing to submit Form AR2 before deadline. A detailed breakdown of the cases is at Annex. RVD will conduct in-depth investigation into the cases and seek advice from the Department of Justice for taking follow-up action as appropriate. Among the cases, a landlord who failed to produce copies of the bills and failed to provide an account in writing when requiring the tenant to reimburse the apportioned water and electricity charges, and who failed to provide the tenant with a rent receipt, was convicted guilty in December 2022 and was fined a total of $6,600. RVD is following up on other cases and will take prosecution actions against landlords contravening the requirements. The Government would like to remind all SDU landlords again that they must comply with the requirements under the Ordinance. Meanwhile, we also appeal to tenants to come forward and report if they encounter any situation contravening the requirements, so as to protect their own rights.
We expect that the number of Forms AR2 received by RVD will gradually increase as a result of the enhanced publicity and enforcement. The Government will also publish SDU rental information within the first quarter of this year as undertaken earlier. As the number of Forms AR2 processed by RVD at the moment only accounts for a fraction of the number of SDUs in Hong Kong, there is yet sufficient data for the Government to fully assess the effectiveness of tenancy control measures. The Government will continue its publicity and enforcement efforts so as to receive more Forms AR2 for analysis, and consider in due course if there is a need to implement further measures, for example, whether to set the initial rent.
On the other hand, although the Government does not have a licensing or registration system for SDUs currently, it does not mean that SDUs are not subject to regulation. Apart from the Ordinance which regulates SDU tenancies, the Buildings Ordinance, enforced by the Buildings Department, also regulates building works associated with SDUs. The Buildings Ordinance regulates the fire safety, building structure safety, environmental hygiene, ventilation, lighting, etc. of SDUs.
A fundamental approach to resolve the problem of SDUs is to continuously increase land and housing supply. The Government will spare no effort and rise to the challenges ahead. To this end, the proposed Light Public Housing project can immediately provide some 30 000 units within five years, which is the most direct way in helping people living in SDUs, offering better accommodation for at least 80 000 people gradually. This could address the housing needs of those in inadequate housing in the quickest, most direct and effective manner. In the future, as the supply of land and housing continues to increase, the demand for SDUs will significantly reduce.
Thank you President.
Ends/Wednesday, January 18, 2023
Issued at HKT 14:45
Issued at HKT 14:45
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