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  • 1 Post By ACHK

Landlord refuses to pay stamp duty and penalty..

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  1. #1

    Join Date
    May 2009
    Posts
    54

    Landlord refuses to pay stamp duty and penalty..

    Hi All,

    I have, what I think is a fairly uncommon situation, and would appreciate any help or advice.

    Before I start, this may be in the wrong forum because I have been here for 3 years. Please let me know if it is.

    I had a 2 year lease which I saw-through on an apartment. This lease had stamp duty paid ( as there was a rental agent involved).

    When the lease was up for renewal, the landlord drafted a new rental agreement, which I did not sign because there were a few small mistakes in it. I asked him to redraft one. It is a 2 year contract.

    He never did, and I never followed up with it. To be honest, we had a good relationship, and I never thought much of it.

    Now, 7-odd months later, my work is asking for a copy of my rental agreement, which must have the Stamp duty. They need this so I can be reimbursed for my (modest) housing allowance.

    After telling my landlord about this, he said it was my responsibility to get stamp duty and that he will not pay. The amount of stamp duty owed now is around 6,000HKD (because of the penalty) which is about 2/3 of my rent.

    So, he has 'offered' to redraft a new lease, but only for 1 year. This way, stamp duty is reduced to 3,000 ( which he also won't pay any of).

    There are 3 issues for me here, which I would very much like some advice on:

    1. I keep reading that splitting stamp duty is a convention, but it does not seem to be a law. Can he refuse to pay?

    2. The landlord says that whether I sign a new contract (1 year) or not (stay on the 2 year) that my rent will increase. The current contract says that the term is a 12 month fixed term and a 12 month optional term. Does this mean that he is in a position to raise the rent regardless?

    3. Does it make sense that my employer needs to show evidence of stamp duty to apply for tax reimbursement (or tax free status) for my housing allowance?

    Any or some answers to these questions would be very much appreciated. To be fair, all involved have been 'nice enough' about things, but I still feel like I am being taken for a ride.

    Suggestions are very much welcome.

    Thanks!


  2. #2

    Join Date
    Aug 2005
    Location
    Clear Water Bay (In Da Jungle)
    Posts
    10,055

    1. Sure he can refuse to pay, its agreement between both of you, according to the Stamp Duty requirements "The landlord, tenant and any other persons signing the tenancy agreement are liable for payment of stamp duty", it states everyone is liable.

    2. Most agreements are 12 months fixed and 12 months optional, it is up to the landlord to raise or not raise your rent after 12 months, it is up to you to decide if you agree on the new price or not, if you agree then you need to sign a new agreement, if you refuse then you need to move on.

    3. Yes it does make sense, i m in the same position as you as my LL didnt send the agreement for stamp duty so I cant get reduction on my tax also which sucks as my HR doesnt accept any agreements without stamp duty.


  3. #3

    Join Date
    Feb 2011
    Location
    Hong Kong
    Posts
    6,331

    Start a new lease so the fee is paid on time.

    Ask your employer to pay you extra for the previous months instead of housing allowance. It will be taxable. How many months do you need housing reimbursement?


  4. #4

    Join Date
    May 2009
    Posts
    54

    Hi, Thanks for the comprehensive replies. That clears everything up. I will sign the new 1 year contract, pay the stamp duty, apply for tax refund for housing, and hope my landlord does not raise the rent too much..

    Unfortunately asking for extra money from my employer is likely not an option.

    Thanks again,

    Last edited by powderfinger; 21-04-2012 at 10:37 AM.

  5. #5

    Join Date
    Oct 2003
    Posts
    2,257

    By the way, if you do decide to pay the stamp duty yourself, if you go in and explain the situation - ie. you thought the landlord had paid it but when you checked with your landlord because you needed a stamped copy for your employer you found that he hadn't and he is refusing to pay but you're just an honest guy trying to do the right thing here etc, it's very likely that they will ask you to write a letter explaining this and waive the penalty (or most of it).


  6. #6

    Join Date
    Apr 2012
    Posts
    21

    " wtbhotia....which sucks as my HR doesnt accept any agreements without stamp duty"

    Stamped Tenancy Agreement is required by Inland Revenue. Assessor from IRD may request it from HR, that's why HR have a keep a proper copy of your TA.

    Last edited by ACHK; 21-04-2012 at 01:02 PM.

  7. #7

    Join Date
    May 2009
    Posts
    54

    Thanks for the advice Dipper, that is super helpful.


  8. #8

    Join Date
    Apr 2012
    Posts
    21

    I believe it's very common in HK that the landlord & tenant split the stamp duty fee (50% : 50%) according to my property agent. (I guess you didn't speak Canto/ didn't ask when you sign the contract & your agent didn't tell you everything. I argued with my previous landlord, she finally agreed to pay half of the stamp duty)

    btw, please calculate if the rental reimbursement (rr) really benefit to you. It's worth to pay the stamp duty if what you saved from the rr is bigger than your stamp duty fee. After rental reimbursed, your taxable income is ( <1/4- 31/3> year income - rental ) +10% . If your bonus is huge or rental just occupied less than 10% of your whole year income, you may not be benefited from your rr scheme. and you bore your stamp duty fee.

    kyeung likes this.