Subdivided units, basic housing units and tenancy regulation

XVII. Subdivided units, basic housing units and tenancy regulation

Part IVA of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) (the “Ordinance”) took effect on 22 January 2022.

Generally speaking, landlords and tenants may freely negotiate and enter into an agreement for fresh letting or renewal of tenancies. The Ordinance to a certain extent imposes restrictions/regulations to that by regulating a specific category of tenancy, namely, tenancies of subdivided units. Other categories of tenancies falling outside the scope of the Ordinance remain unaffected.

Historically, security of tenure regime is not totally new to Hong Kong. The Landlord and Tenant (Consolidation) (Amendment) Ordinance 2004 has removed the former security of tenure regime which provided a domestic tenant with a statutory right to renew his tenancy at prevailing market rent. Following the commencement of the Landlord and Tenant (Consolidation) (Amendment) Ordinance 2004 with effect from 9 July 2004, domestic tenancies (created on or after 9 July 2004) should be terminated in the following ways:

• in accordance with the terms of the tenancy or as agreed between the parties;
• in the absence of a contractual notice requirement or parties’ agreement, a fixed term tenancy will end upon expiry of the term whereas a periodic tenancy may be terminated by a notice to quit at the length of the notice period in accordance with the common law.

Significantly, as will be seen below, a breach of some of the requirements under the new Part IVA of the Ordinance may entail criminal sanctions. 

Further, the Government introduced a separate regulatory framework for the subdivided flat sector on 1 March 2026, namely the Basic Housing Units Ordinance (Cap. 658). The Basic Housing Units Ordinance establishes a dedicated regulatory regime for subdivided units in residential buildings, or the residential parts of composite buildings, that are let for habitation. Under this regime, a subdivided unit must (i) meet prescribed minimum living condition standards, and (ii) obtain “Basic Housing Unit” (BHU) recognition, before it may lawfully be let out for residential use.

Accordingly, these regulatory measures carry significant implications for owners, operators, tenants, and sub-tenants of subdivided units.