One of the most controversial of bills, rental legislation was passed yesterday despite two of seven Articles being rejected during the continued plenary session in the Legislative Assembly.
Government appointed legislator Tommy Lau Veng Seng questioned the second Article, asking whether there would be enough notary publics to support the many rental contracts in the city.
“I know the Legal Affairs Bureau (DSAJ) has a number of notary publics, but only 20 to 30 are active and only a few know Chinese,” said Lau.
Legislator Melina Chan Mei Yi also questioned how notaristation could effectively prevent deadbeat tenants, while lawmaker Vong Hin Fai asked about penalties for refusal of notarisation.
In response, legislator Song Pek Kei said that the DSAJ had already been consulted regarding technical feasibility.
“The government ensured enough support for running the procedures,” said Song.
Indirectly elected legislator Leonel Alberto Alves added that 100 notary publics would be available in the future.
“[If there are] 48,000 rental contracts next year, with 100 notary publics […] so [each] notary would handle 480 each year and 1.4 contracts per day,” said Alves. “Therefore I believe the workload would not be [too much].”
Alves further indicated that the bill would prevent landlords paying three times the stamp duty owing to the absence of notarisation of the contracts, while saying that the bill would raise the “alarm for people to pay taxes on time”.
Lawyer Alves said fake rental contracts would also be prevented, improving the city’s development of the financial sector.
Meanwhile, several legislators raised strong oppositions over the addition of another year for contracts of three years.
With the bill’s intention to assist SMEs (small and medium-sized enterprises), legislator Chan Chak Mo commented that the bill would, in fact, shrink supply, making SMEs difficult to start or run a business as well as supporting deadbeat tenants.
“It is rare for landlords to drive tenants away because it costs more to seek another tenant; otherwise only if he knows the price in the future will increase would they ask a tenant to leave,” said Chan.
Nevertheless, 17 lawmakers voted for the Article while seven voted against.
Regarding the coefficient mechanism, government appointed lawmaker Ma Chi Seng questioned whether there was any scientific support for running the mechanism and legislator Mak Soi Kun also asked whether a specialised group could determine the coefficients.
Song said property prices had increased significantly over the past decade, while emphasising that the mechanism would not interfere with the operation of the free market.
For lawyer Alves, moderate interferences are necessary for capitalism.
“I totally support the free market and the government should not interfere,” remarked Alves. “But it is necessary for the government to correct certain situations within the capitalist system.”
Lawmaker Kwan Tsui Hang pointed out that the rental market should not always consider investment.
“My opinion [is that] rent is a solution for living not for investment, that’s why there are so many protections for tenants,” said Kwan. “If the market catches a fever in the future why not prepare paracetamol?”
The third Article relating to the coefficient mechanism granting the Chief Executive the power to interject in the rental market for temporary and exceptional situations, nonetheless, was turned down, with only 15 lawmakers voting yes.
As such, the fourth Article regarding the technical procedures of running the coefficient mechanism connected to the third Article was also deemed invalid.
Legislator Jose Coutinho said the government does not have a particular department to handle arbitration in the city.
“I would advise the government to […] encourage more arbitration,” he said, “because we can’t always depend on the courts.”
The proposed bill suggested the setting up of an arbitration mechanism in order to simplify the process of resolving any disputes rather than involving the courts.
The Article relating to setting up an arbitration centre passed with 22 lawmakers nodding approval.
The sixth Article, meanwhile, was amended during the plenary session regarding the implementation of the second Article – including the third and fourth Articles once the bill is passed. The bill was passed by 25 legislators.
The last Article, also passed, indicates the new rental law must be implemented 180 days after it is announced.