An advocacy group has said legislation designed to control rents has failed to help Hong Kong’s underprivileged and encouraged rent increases.

The Society for Community Organisation appealed to the government to set caps on rent levels in a bid to alleviate the problem.

The rent control legislation prohibits landlords of subdivided flats from raising rents in the first two years of a new tenancy.

An online survey conducted by the society and completed by 291 tenants of subdivided flats between January and May found that 60 per cent said they noticed the rents of similar units had increased after the introduction of the new law.

A grass roots group, the Society for Community Organisation calls for tougher regulation of rent for subdivided flats.

Around 10 per cent of 231 tenants, whose tenancies had not yet expired, had their rents raised by an average of HK$300 (US$38) after the law was implemented and the rent-to-income ratio had increased from 40.9 per cent in 2021 to 42 per cent in 2022.

Angela Lui Yi-shan, a community organiser with the society, highlighted the law, which came into force in January, did not ban landlords from increasing rents when leases were renewed, which created a “legal loophole” and allowed them to exploit tenants.

She added: “When the leases were being renewed, some landlords … might deliberately raise rents by an amount that might be higher than their usual rent increase to compensate for the coming two-year period in which the rent will be fixed.

“The government only rolled out a 10 per cent cap on the rent increase. But the initial rent level has already exceeded what the tenants can afford.”

Liu said that to avoid being regulated by the new law, some landlords even refused

to renew leases while the tenants were still renting the units.

Tenants will have priority to renew for two more years in the third year of a lease under the legislation and the rent increase will be capped at no more than 10 per cent and should not surpass the government’s index that reflects the rental level of private residential units.

Landlords are required to sign a standard agreement that only lays out the rental amount, deposit, utility charge and fees for any breach of the agreement.

The new law also set out that electricity and water charges for tenants in a subdivided unit must not exceed the total amount written on the bills for the whole unit. Those who overcharged will face a fine of at least HK$10,000 (US$1,270).

A 44-year-old woman, who asked to be identified only as Chan, said she lived with her husband and son in a 150 sq ft subdivided flat in Yau Ma Tei with a monthly household income of HK$10,000.

She added her landlord asked for a HK$500, or 10 per cent, increase when she was renewing her tenancy in January, which pushed her rent up from HK$5100 to HK$5600 a month.

Chan said her landlord even applied to the Lands Tribunal to evict her, forcing her to agree to the rent increase.

The online survey also found more than half of the respondents would choose not to complain about the landlords if they had violated the law and 63 per cent said there was a lack of support for tenants who might not be able to seek help if there was a conflict with their landlord.

Lui explained: “As the tenants are still renting the flat, they are afraid of the consequences after filing a complaint about their landlords.”

She said the government should cap rents at 120 per cent of the unit’s rateable value as estimated by the Rating and Valuation Department.

Lui added: “Without putting a ceiling on the rent level, the problem of expensive rents would not be solved at the root.”

Sze Lai-shan, the society’s deputy director, called on the government to step up enforcement and promotion to boost the deterrent effect of the law and educate the public.

She said: “The government can send letters to landlords to conduct random checks on the leases.

“The authorities can also visit the units and distribute leaflets on the streets, as well as produce TV commercials.”

Hong Kong has around 92,200 subdivided flats, mostly located in rundown buildings and occupied by the city’s most impoverished people.