mid-contract rental reduction in these critical times

I have heard of tenants in HK asking for a rent reduction during recent economic downturns. I thought a lease was binding until its conclusion, but is there a convention that a landlord should acquiesce to a reduction request when the market has dropped considerably, even when the lease is nowhere near expiring?

I am in both circumstances, and my tenant wants a reduction. I don't want to end up paying the same high rent while my tenant gets relief from me.

Would anyone have any suggestions / experiences?

Thanks for the replies, 'LG is MV' and Patrick Yiu. Yes, I doubt they'd be keen to agree to a rise mid-contract.

I like Patrick's idea of tying any concession to some condition. A friend suggested asking for 12 months in advance and making the 13th free. I'm just not sure I want to tie myself down to keeping the place though, which that would entail.


If I decided to comply with their request for the sake of keeping a tenant (not sure how 'good' they are after only 4 months, having had rent concessions at the start and already asking for a reduction) the next question is - how much?

The rent is only $14,000, as is my mortgage payment.

If it's just them wanting something because they feel like they're victims of poor timing, would $500 keep them happy?

Would $1000 (7%)? I think any more would start to make me unhappy!

Is there a set % or any any convention? e.g. Reduce to the current market rent?


I know I'll have to decide based on my circumstances and my second-guessing of their motives and intentions, but any further information or sharing of experience would be much appreciated.

Thanks for your interest LG is MV. The apartment is a 2b/r in a convenient part of Sai Ying Pun, and was gutted and totally renovated before the tenants moved in in mid-July. They've only been there officially 4 months (1st August), but I gave them the key the last two weeks in July as that overlapped with their old lease. Perhaps I was too generous then?

I thought he was a civil servant, though possibly retired. If so, he'd have a pension. He says his private company has cut his salary. I saw their previous flat, which was immaculate, and they seemed a pleasant couple. They were also recommended.

Thanks again for the advice. I checked them out and feel satisfied there's every likelihood they're doing better than I am. I think they can't be doing worse - they probably think I'm a prosperous professional property investor, not a mere dabbler who's rented more than owned.


Anyway, I've said no. If it comes back and bites me on the bum, so be it.


BTW, since you asked, LG is MV, the flat is 770'/540' - small but with a 20' living room and lots of light, air and open views, a few of them quite interesting. There's also a garden terrace for use of any residents.

I think when you sign a tenancy agreement you expect some inflation so it's hard for the landlord to say, look i could rent the appartment for more now so i need to increase your rent.


What we're experiencing is a financial tsunami that many didn't see coming. I think asking for a reduction is fair especially if the tenant's income has decreased but asking only after 4 months seems a bit early.


As for the suggestion of offering $200 (likely to offend) and that calculation of how much it'd cost them to move, there are people who don't count every penny but make decisions on how satisfied they are.

i complete the first 12 months of my lease in Jan 2009. Have been checking around, rents are down 25 % in my area ( tai koo shing). I am paying 20 K for a 825 sq ft, fairly well decorated place. I could move to a 1000 sq ft within the same rent or marginally lower OR move to another similar size apartment that costs HKD 4 K per month less. The thing is both my wife & I are in love with the way this apartment is done up. Is it reasonable in HK to ask the landlady for a rent reduction citing extra ordinary market conditions ?

They're just 'trying it on.' Plain and simple. I'm sure they're fully aware of the costs involved if they try to find somewhere else. Along with forfeiting their current security deposit (presumably $28,000) they'll likely be up for another $49,500 with another security deposit, a month's advance rent, stamp duties and a likely agents fee (if at similar cost). Suggesting that you lower your rent to keep them happy is laughable. They're already happy they don't have to move.

The whole 'market shift' hype is a complete non-issue at the moment. Sure, no-one is buying or selling property at the moment, but that just puts more energy into the rental market. Newspaper columnists need something interesting to write about, and think that price shifts in $200,000pm properties are a market indicator. But who owns the majority of this level of property? Major developers (who will make money at half their asking). Who rents these properties? Over-paid banking execs?...

Prices in the lower end of the market will shift, but not as quickly as people think. Panicking landlords offering deals can be found, but there is still a lot of denial amongst landlords regarding rental reductions.