Moving into a new flat can be expensive. The cost of moving and other expenses included in the process can bring about much anxiety so it’s worth knowing what to anticipate so you can avoid unwanted surprises.
To help you understand your costs, here are 4 immediate payments due after you sign a tenancy agreement. Make sure you read each one so you’re financially prepared.
The fees of your property agent
A property agent’s fee is usually equivalent to a months’ worth of your rent. Half of this is paid by yourself and the other half is paid by the landlord. It’s a complete misconception for renters to think they bear all the costs.
eg. if the rent is 30,000 HKD/month
Agent Fee = 15,000 HKD from the renter + 15,000 HKD from the landlord
Landlords also pay fees to property agents so they can find a suitable tenant. Understandably, it’s not surprising for landlords to prefer a fixed-term tenancy agreement which carries a minimum of 1 or 2 years as a result.
Stamp duty is the process of getting your tenancy agreement stamped and registered with the Inland Revenue Department Stamp Office. This protects the rights of both the tenant and the landlord.
The cost of the stamp duty depends on the duration of your tenancy agreement.
Both the renter and landlord share these costs.
To find out more, you can refer to the Hong Kong Government’s Stamp Duty page for details.
Advanced rental payments
The standard tenancy agreement normally requires a months’ worth of advance rental payment.
It’s important not to confuse this with a security deposit. This payment covers rental fees for the first day to the last day of the contract month in your agreement. To elaborate, if your tenancy agreement starts on September 4th, this is the first day of your ‘contract month’ and the last day would be September 30th.
A security deposit is normally equivalent to two months’ worth of your rental costs.
The security deposit protects landlords if a tenant breaks or violates the rental agreement and is used to cover damage to the property as well as cleaning and removal fees of unwanted items once you move out.
At the end of your lease, your landlord will return the amount in full (but also without interest) if you return the flat in good condition and you’ve adhered to the stipulations outlined in your agreement.
Do remember, you cannot use your security deposit to cover any outstanding rent or utilities. And don’t worry, general wear and tear is acceptable and shouldn’t be considered damages to the flat.
When you’ve finally found the perfect flat to rent and you’ve signed your tenancy agreement, you’ll need to make 4 payments. These are your property agent fees, stamp duty, advanced rental payments and finally, your security deposit.
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