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Q1. A landlord letting a subdivided unit in an industrial building maintains that the tenancy is not for domestic use, and therefore not to be regulated by Part IVA of the Landlord and Tenant (Consolidation) Ordinance. The tenant disagrees and would like to take legal action. What can the tenant do in order to prove that the tenancy is for domestic use and thus a regulated tenancy under the Ordinance? What factors will be taken into consideration by the Court when determining whether the tenancy of the subdivided unit is a regulated tenancy?

 

The tenant may apply to the Lands Tribunal to determine whether or not a tenancy for the premises is a regulated tenancy for the purpose of Part IVA of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7).

 

In determining whether a tenancy is a domestic tenancy or not, the Tribunal may consider the following matters:

  • Purpose specified in tenancy;
  • Purpose for which premises are actually used;
  • Tenant to establish landlord’s agreement to change of user as dwelling;
  • Purpose of sub-tenancy subject to superior tenancy;
  • Whether the premises are used as a boarding or lodging house;
  • The covenants, terms and conditions in the Government lease or tenancy in relation to the premises;
  • Any occupation permit issued under the Building Ordinance (123) in relation to the premises;
  • Normal additional uses of the premises that are consistent with the domestic nature of a tenancy having regard to the following:
                 1. the floor area in occupation for the uses (whether at all times or not);
                 2. the number of persons engaged in the uses but not dwelling on the premises;
                 3. the furnishings, fittings and contents of the premises;
                 4. the gross profits resulting from the uses relative to the rent.

Although most of the covenants, terms and conditions in the Government lease or tenancy on the industrial buildings expressly state that the premises can only be used for specific purposes other than dwellings, the tenancies in these premises might still be taken as domestic tenancies and be regulated by Part IVA of the Ordinance in the following circumstances:

 

Tenancy with a written purpose of dwelling

 

If a tenancy specifies in writing that any premises are to be used for a domestic purpose, the premises are taken to be used for that purpose unless it is proved otherwise;

 

Tenancy with a written purpose other than dwelling

 

Where the purpose referred to in a tenancy on the subdivided unit is for industrial use only, the premises are taken to have been let for dwelling, if:

  1. the tenant can establish that the landlord has agreed on or acquiesced in the change of user in breach of the tenancy expressly or by implication; and
  2. the premises are being used primarily for dwelling.

 

For the purpose of establishing (2), the Primary User Certificate issued by the Commissioner of Rating and Valuation (Commissioner) can serve as evidence of the primary user of the premises as at the day of the inspection.

 

Tenancy without a written purpose or user

 

If there is not sufficient evidence showing that any premises were originally let for a particular purpose, the purpose of the tenancy of the premises is to be determined by the primary user of the premises. For this purpose, the Primary User Certificate issued by the Commissioner can serve as evidence of the primary user of the premises as at the day of the inspection.

 

Sub-tenancy under a superior tenancy

 

For a tenancy on a subdivided unit that is a sub-tenancy created out of a head lease (or superior tenancy), the terms and use of the head lease (or superior tenancy) will be taken into consideration. If there is evidence showing that the premises of the head lease:

  • were let other than as a dwelling; or
  • were being used other than as a dwelling,

at the commencement of the subject tenancy, the premises of the subject tenancy (subject premises) are taken to be used other than as a dwelling unless the tenant of the subject premises satisfies the Tribunal to the contrary.

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