Advance Payment
The payment of the first payable month in a lease which usually includes rent, service charges, government rates & rents.
Agency Fee
The service charge payable to agency company for the real estate services being provided.
Air-Conditioning Charges
The charge payable to management company for building which provides central air conditioning systems.
Area Definition
The area is usually measured and expressed in Gross(G), Lettable (L), and Net (N) in Office Premises.
Gross Area (G)
The total area of all floors of a building as measured to the outside of exterior walls. It includes toilets, lift lobbies, columns, staircases, smoke lobbies, plant rooms, and risers but excludes lift shafts.
Lettable Area (L)
The area of a building as measured to the available space for rent to tenants including toilets, lift lobbies and columns. It excludes staircases, smoke lobbies, lift shafts, plant rooms, and risers.
Net Area (N)
The area included in surrounding walls of a building including lift lobbies. It excludes toilets, columns, staircases, smoke lobbies, lift shafts, plant rooms, and risers.
Break Clause
Tenant may request a Break Clause to have subletting right or to terminate the lease early. Single landlords in Hong Kong usually request a Break Clause to terminate the lease for either Sale or redevelopment purposes.
Bare-shell
Single ownership building landlords usually provide bare-shell conditions at lease commencement and shall request the same from the tenant upon lease expiry. In some cases, it is negotiable with fully integrated ceiling system.
Decoration
Nominated and Individual contractor are to be used for office decoration.
Effective Rental
The average monthly cost of office premises with consideration of rent free period.
Face Rental
It refers to the monthly cost of office premises in regardless of the rent free period being granted.
Government Rents
It is usually at landlord’s account. It pays to the government at a rate of 3% of the annual rental. It charges at a quarterly basis.
Individual Contractor
It is to be assigned by the tenant for office internal decoration.
Lease Term
Two or Three years with fixed rent are usually offered to tenants of office premises.
Legal Costs
It is normal practice that single landlord will pay the solicitor for drafting the Tenant Agreement, while tenant should pay for legal charge on his own.
Management Fee
A normal charge for maintaining the building facilities and securities in a monthly basis
Nominated Contractor
Electricity, Air-conditioning, and Fire facilities in common area are normally assigned to nominated contractor in most prime office buildings in Hong Kong
Office Conditions
Landlord usually provides Bare-shell condition, or fitted condition which is left by previous tenant.
Options to Renew
It gives the tenant the priority right to renew the lease, usually for a stated period of Two to Three years upon expiry and at the prevailing market rental.
Rental
Rental is normally payable monthly. It is quoted as exclusive of management fee, air-conditioning charges, government rates and rents, unless otherwise stated.
Rent Free Period
Rent Free Period is the period in a lease that the tenant shall be free from paying rental to the landlord. However, service charges, government rate and rents and other outgoing charges are in Tenant’s account during the rent free period.
Reinstatement
Should there be reinstatement clause in a lease contract; tenant shall be obliged, at its own costs, to reinstate the premises into bareshell condition (or stated conditions) to the landlord upon lease expiry or before termination of lease.
Rent Review
Tenant in Larger spaces usually enter a lease for 6 years or more with the option to review the rent every three years based on the prevailing market situation.
Security Deposit
Security Deposit is the deposit to be kept at Landlord’s account without interest. It is refundable at lease expiry or termination of lease with conditions stated in lease contract.
Most landlords require Three (3) months’ rent, service charges, government rates & rents as Security deposit. However, some landlords may require Four (4) to Six (6) months’ rent, service charges, government rates & rents as Security deposit when necessary. It usually happens when the tenant is either a new or foreign setup company or company with insufficient paid up capital as required by landlord.
Service Charges
It includes Management Fee and Air-conditioning charges (only for the buildings with Central Air-conditioning System). The charge is to maintain the service provided by Management Company and the operation of air-conditioning system. Service charges may be adjusted periodically to reflect the increase/decrease of operation costs.
Stamp Duty
It is charged by Inland Revenue Department of HKSAR. It shall be borne equally by tenant and landlord, or solely by either party in negotiation.