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(Source : Information Services Department)

LCQ10: Regulation of leases under the Stamp Duty Ordinance


     Following is a question by the Hon Alice Mak and a written reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (January 21):


    Some grass-roots organisations have recently relayed to me that most of the tenancy agreements, made between landlords leasing out sub-divisions of flat units (commonly known as "sub-divided units"), cubicle apartments and caged homes and their tenants, have not been stamped by the Stamp Office of the Inland Revenue Department in accordance with the relevant requirements under the Stamp Duty Ordinance (Cap. 117), and stamp duty has not been paid. As such, the interests of the tenants will be undermined when the landlords breach any terms of the tenancy agreements. In this connection, will the Government inform this Council:

(1) of the number of cases in which tenancy documents of leased residential properties were stamped and the relevant amount of revenue on stamp duty, in each of the past five years;

(2) whether the authorities initiated in the past five years civil proceedings against landlords or tenants of leased residential properties for non-payment of stamp duty for their tenancy documents; if they did, of the annual numbers of such cases and the total amounts of tax being recovered; if not, the reasons for that;

(3) whether the authorities enforced the law proactively in the past five years by conducting random checks on whether the landlords and tenants of leased residential properties had fulfilled their obligations to submit tenancy documents to the Stamp Office and pay stamp duty; if they did, of the details; if not, the reasons for that, and whether the authorities will consider conducting such random checks; and

(4) whether the authorities have taken measures to publicise among landlords and tenants of leased residential properties that unstamped tenancy documents might not be accepted as evidence by the court in civil proceedings, thus rendering it difficult for the landlords or tenants to recover through judicial proceedings the losses suffered as a result of the counter party's breach of terms of the tenancy documents; if they have, of the details of such measures; if not, the reasons for that, and whether the authorities will consider taking relevant measures?



    Under Section 4 and Head 1(2) of the First Schedule of the Stamp Duty Ordinance (Cap. 117) (SDO), all the executing parties of a lease (i.e. landlords and tenants) are liable for stamping the lease with the stamp duty payable. The reply to the four-part question raised by the Hon Alice Mak is as follows:

(a) The number of leases stamped by the Stamp Office and the amount of stamp duty involved during the past five years are at Annex. The Stamp Office's statistics does not classify the leased properties involved by categories of residential properties or non-residential properties.  

(b) If any unstamped lease is found, the Stamp Office will demand payment of the stamp duty involved and the associated penalty for late stamping under section 9 of the SDO from the relevant landlord and tenant. In general, landlords or tenants will make payments as demanded by the Stamp Office. The Stamp Office had not instituted any legal proceedings to recover outstanding stamp duty or penalty in respect of leases in the past five years.

(c) A lease executed in respect of an immovable property in Hong Kong is chargeable with stamp duty under the SDO. In discharging its duties, the Stamp Office will, from time to time, come across information of leased properties. Should there be leases executed in respect of these properties, the Stamp Office will investigate to ensure that the leases are duly stamped.

(d) Under section 15 of the SDO, no instrument chargeable with stamp duty (including a lease) shall be received in evidence in civil proceedings or shall be acted upon, filed or registered by any public officer or body corporate unless such instrument is duly stamped. Therefore, it is of utmost importance for landlords and tenants to execute tenancy agreements and have the agreement stamped with stamp duty paid in order to secure their interests. The Inland Revenue Department has explained such requirement on its website, and in the stamping procedures and explanatory notes in respect of leases. In addition, the Government will, as stated in the Long Term Housing Strategy, continue to work with relevant organisations to enhance public education efforts and to promote good tenancy practices.

Ends/Wednesday, January 21, 2015
Issued at HKT 11:42