On October 16, Hong Kong Chief Executive John Lee delivered the 2024 Policy Address at the Legislative Council, announcing the government’s initiative to establish a rental system for subdivided residential units to tackle the “subdivided flats” issue.
Subdivided flats refer to residential units that have been partitioned into smaller rooms and rented out to multiple tenants. In the Policy Address themed “Reform Together for Development, Benefitting Lives to Build the Future,” Lee emphasized the government’s commitment to accelerating efforts to address the housing concerns of Hong Kong residents.
Lee revealed that a task force dedicated to solving the subdivided flats problem has submitted a report, prompting the government to legislate a rental system for subdivided units. The standard units will be termed “Simple Homes.” The government proposes that this designation should meet certain criteria, including having windows, an independent toilet, and a minimum area of 8 square meters.
“Currently, there is a significant variation in the conditions of different subdivided units, particularly concerning fire safety, ventilation, and whether they have independent kitchens and bathrooms,” Lee explained. He stressed the necessity of establishing minimum standards to eliminate unsuitable units. Approximately 110,000 households currently reside in subdivided units, indicating a tangible demand for this type of housing. The economic incentive for landlords to partition and rent out their properties at higher total rental incomes is substantial. Appropriate regulation will ensure that these “Simple Homes” can meet market demand while adhering to standards.
Lee asserted that any subdivided residential units not meeting the necessary standards must undergo renovation to qualify as “Simple Homes.” These renovations must be verified and certified by professionals. Failure to comply could result in criminal liability for landlords, while tenants will not face legal consequences. The government will provide existing owners of subdivided units with time to carry out required improvements, and a grace period for enforcement actions against illegal rentals will be established. A registration system will be set up, allowing registered landlords to benefit from this grace period. The registration will only accept existing rental subdivided units; newly entered units must be certified as compliant “Simple Homes” before they can be rented out, eliminating the need for any grace period.
Lee emphasized that as new units entering the market must be certified as compliant “Simple Homes,” and existing registered units must be renovated accordingly, any landlord continuing to rent out non-compliant units after the grace period will do so unlawfully. This will lead to a systematic phase-out of such units until they are entirely eliminated.
