Lease Agreement and housing allowance

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  1. #1

    Join Date
    Aug 2008
    Posts
    26

    Lease Agreement and housing allowance

    Hi

    I'm about to sign a lease contract for the first time in HK and need some advice.

    My company had agreed to pay a higher amount than my actual lease and in my contract I get to keep the difference (and have to pay tax on it) but I want to check a couple of things.

    1) Should I sign the lease or my company? Is there any benefit in them signing? As far as I know I can still claim the housing allowance even if I sign it.

    2) What can I claim as part of the housing allowance? Can it include leasing agent's fees, cleaners, phone internet and pay TV? What about furniture?

    3) What should I look out for or try and negotiate in the contract? Its a buyers market at the moment so I think we have the upper hand.

    4) Is there a minimum amount I need to deposit to hold the place while I sort out the contract etc with my company (if necessary)

    Any advice people have please let me know ASAP as I'm in the middle of final negotiations with the expected pressure from leasing agent to sign something.

    Cheers
    Julian


  2. #2

    Join Date
    Jun 2005
    Location
    Hong Kong
    Posts
    23,221

    What you can negotiate out of your employers is purely a commercial discussion between you and them. For tax purposes, the details are here: http://www.ird.gov.hk/eng/pdf/pam44e.pdf

    The IRD allows "serviced apartments" as places of residence.

    The benefits of the company signing the lease are:

    1) The landlord may give them a slightly better deal (some are happier with company leases).

    2) You don't have to worry about getting fired within the minimum term of the lease and being committed to pay rent.

    3) If the company pays the agent's fees then they will not be taxable income for you. I suspect that if the company pays the utilities then they may also not be taxable, but the pamphlet suggests that anything more than a simple rental will be examined closely, and your employer may not regard it as worth the bureaucracy that would be necessary to satisfy IRD. But if you're paying for stuff then only the rent will be treatable as housing allowance for tax purposes.

    By the way, I don't see how any of this stacks with you professing not to have a HKID. You cannot be employed legally in Hong Kong without a HKID of some sort.


  3. #3

    Join Date
    Sep 2008
    Posts
    3,683
    Quote Originally Posted by juleshoolio
    1) Should I sign the lease or my company? Is there any benefit in them signing? As far as I know I can still claim the housing allowance even if I sign it.
    As PDML said many landlords want some insurance and feel more comfortable with a company contract.
    My landlord was very concerned that I signed myself and not my company but they gave me a letter stating that I am employed there, that they pay me housing allowance and the duration of my contract so he was finally convinced that I am not running away soon.

    2) What can I claim as part of the housing allowance? Can it include leasing agent's fees, cleaners, phone internet and pay TV? What about furniture?
    Up to you and the company, anything you agree on goes, as long as it's legal.

    3) What should I look out for or try and negotiate in the contract? Its a buyers market at the moment so I think we have the upper hand.
    Are you renting furnished and what's the state of the unit? Maybe you want something fixed up, replaced (furniture, elec. appliances ...), something additional (curtains, ceiling lights, furniture ...)? Don't forget to negotiate the rent, 10-20% less should be possible. You can also negotiate the agent fee, so don't just accept if they tell you 50%.

    4) Is there a minimum amount I need to deposit to hold the place while I sort out the contract etc with my company (if necessary)
    Who is asking for that? Anyway, I think it's negotiable, just make sure that you get the money back or that it will be used as (part of) the deposit that you need to pay when signing the contract.

    Any advice people have please let me know ASAP as I'm in the middle of final negotiations with the expected pressure from leasing agent to sign something.
    Do not let the agents pressure you, they will always try for a quick deal so they get their money.

  4. #4

    Join Date
    Aug 2008
    Posts
    26

    Cheers thanks for your help

    By the way PDLM I do have HKID so I'm legal