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Friday, May 27, 2022

Landlords can't chase late rent for 3 months

Landlords can't chase late rent for 3 months

Lawmakers yesterday passed a temporary law which prohibits landlords from terminating lease agreements with or suing tenants of specified sectors if they fail to pay their rent on schedule.
The Legislative Council yesterday gave the green light to the temporary protection measures for businesses.

Under the bill, landlords cannot recover any outstanding rent during a three-month protection period if their tenants failed to pay in accordance with the tenancy from January 1 until the end of the period.

The bill states that a landlord will be liable to a fine equal to twice the amount of the rent or no less than HK$50,000 if they violate the law.

"During this critical juncture of fighting the pandemic, we must take all necessary measures to preserve the vitality of the economy, in particular the survival of small and medium enterprises, and strive to safeguard jobs," Financial Secretary Paul Chan Mo-po said.

"Although the social distancing measures began to relax last week," he said, "business still needs a period of time to recover."

However, real estate and construction sector lawmaker Louis Loong Hon-biu said he opposed the principle of interfering with private contracts through legislation. "Even if it is an extraordinary short-term measure, it will inevitably damage Hong Kong's reputation as an international financial center," he said.

Lawmaker Rock Chen Chung-nin, from the Election Committee constituency, said he understands that the government wants to help landlords and tenants get through these difficult times together, but this bill would destroy the contractual spirit.

He hoped the government would not introduce measures that interferes with the free market in the future.

However, wholesale and retail sector lawmaker Peter Shiu Ka-fai supported the law as it was passed in the hope that landlords and tenants would have time and room to discuss rent reduction and other options.

The temporary law was proposed in the 2022-23 budget to enhance liquidity support for businesses.

An exemption could be given if landlords and tenants reach mutually agreeable rental agreements during the protection period.

Landlords whose livelihoods would be adversely affected by the implementation of the legislation could also be provided with interest-free rental advancement.
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