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2 Year Contract Landlord wants to Raise Rent after 1 Year

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  1. #1

    Join Date
    Apr 2008
    Posts
    2,879

    2 Year Contract Landlord wants to Raise Rent after 1 Year

    I moved into a new apartment Dec 2009 and signed a contract till Dec 2011. Landlord now called and wants to raise rent by $1200 as he heard that other flats at my estate already go for way more than that (not completely true, transaction database shows some more, some less expensive in recent months, and actually not very many transactions).

    It's a standard contract as used by Midland. At the end of the contract is a "Break Clause" with the following wording:

    Notwithstanding anything to the contrary hereinbefore contained, the Landlord/Tenant either party shall be entitled to terminate the Agreement earlier than as herein provided by serving not less than one months' written notice or by paying one months' Rent in lieu to the Landlord/Tenant/ other party provided that the said written notice shall not be served before the expiration of the 11 month Term of Tenancy.

    Is it standard practice to "abuse" the break clause to raise rents?

    I'll of course tell them I don't agree etc, but I am a bit afraid I'll have to move beginning of December and pay property agent fee and go through the trouble of moving just to move into a similar expensive apartment. The apartment was empty for almost a year before I rented it, so hopefully they remember that when I tell them to get lost


  2. #2

    Join Date
    Aug 2006
    Posts
    7,517

    It's hassle for you if you move out, and also hassle for the landlord - he/she also has to pay agent commission; there is lost rent while the property is empty; they might need to pay for cleaning and any minor repairs before a new tenant moves in. So, you have to negotiate, but also know your bottom line. Are you willing to move out if the landlord is not willing to budge?

    Also, in a time of falling rents, the tenant could use the same tactic.

    Last edited by drumbrake; 24-10-2010 at 01:40 PM.
    100LL likes this.

  3. #3

    Join Date
    Jun 2004
    Location
    HK
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    14,624
    Quote Originally Posted by 100LL:
    I moved into a new apartment Dec 2009 and signed a contract till Dec 2011. Landlord now called and wants to raise rent by $1200 as he heard that other flats at my estate already go for way more than that (not completely true, transaction database shows some more, some less expensive in recent months, and actually not very many transactions).

    It's a standard contract as used by Midland. At the end of the contract is a "Break Clause" with the following wording:

    Notwithstanding anything to the contrary hereinbefore contained, the Landlord/Tenant either party shall be entitled to terminate the Agreement earlier than as herein provided by serving not less than one months' written notice or by paying one months' Rent in lieu to the Landlord/Tenant/ other party provided that the said written notice shall not be served before the expiration of the 11 month Term of Tenancy.

    Is it standard practice to "abuse" the break clause to raise rents?

    I'll of course tell them I don't agree etc, but I am a bit afraid I'll have to move beginning of December and pay property agent fee and go through the trouble of moving just to move into a similar expensive apartment. The apartment was empty for almost a year before I rented it, so hopefully they remember that when I tell them to get lost
    Totally usual practice in HK. I moved twice due to this. now I have a slightly different contract (to prevent such sudden move). But really it is totally "normal" in HK.
    100LL likes this.

  4. #4

    Join Date
    Oct 2006
    Location
    Hong Kong
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    15,557

    Pretty standard practice in HK. I've used it being a landlord and experienced it being a tenant.

    You have three choices: move, suck it up, or try and negotiate something with the landlord.

    100LL likes this.

  5. #5

    It's standard, not abuse of a clause.

    One year dead, one year live - that's what HK is all about!

    I'd negotiate, personally. Look around at other properties similar to yours in your area and see what the market price is. If you moved, you'd have to pay the market price anyway so see if the LL will take that instead.

    100LL likes this.

  6. #6

    Join Date
    Jun 2005
    Location
    Hong Kong
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    23,205

    If you're happy with the place (and the landlord) and decide to negotiate then if you have cash consider offering to pay, say, 6 months up front at the current rate (or even the whole 12 months). With current safe investment returns that's only worth a couple of percent, but local landlords seem to value getting the cash in much more highly than that.

    100LL likes this.