Landlord and tenant – Part IV – grant of new tenancy – duration – new rent – Sections 117, 119I, 119K Landlord and Tenant (Consolidation) Ordinance, Cap. 7.
IN THE LANDS TRIBUNAL OF HONG KONG
Coram: TRIBUNAL: His Honour Judge Cruden, Presiding Officer and M.W. Phillips, Esq., Member.
Date: 7th day of October, 1983
1. The applicant is the tenant of the domestic premises being Apartment C-7, Woodland Heights, 7th Floor, together with Car ParkingSpace No. 18, No. 2C Wongneichung Gap Road, Hong Kong of which the respondents are the landlords. The applicant entered into possessionof the subject premises under a lease dated the 26th day of December 1975 for a period of 5 years from the 1st day of October 1975at a rent of $4,500 per month exclusive of rates together with a further sum of $500 per month in respect of the hiring of certainfurniture. On the 12th day of December 1980 the parties agreed, in accordance with Section 55, to the total payments of $5,000 per calendar month under the tenancy agreement being increased to $6,050 per calendar month exclusiveof half of the rates, which remains the current rent.
2. On the 23rd day of June 1983 the applicant applied, pursuant to Section 117(1), for a now tenancy. On the 6th day of July 1983; the respondents filed a notice of opposition indicating that the application fora new tenancy was not opposed but that no agreement had been reached as to the new rent, the duration or other terms of the new tenancy.
3. At the hearing the parties indicated that they were agreed that the new tenancy shall commence on the 1st day of July 1983 the landlordwould pay the property tax assessed on the subject property; and that the tenant would pay the rates and management charges. Theterms in dispute were the duration of the new tenancy and the new rent.
4. The duration of the current tenancy is 5 years. For the new tenancy the applicant seeks 3 years; the respondent will only agree to2 years. In support of a duration of 3 years we note that it is closer to the current duration than 2 years. However, the applicantplaced greater weight on the fact that during the current 5 years tenancy he had at his own expense installed a new gas stove andalso incurred substantial electrical rewiring expenses including the provision of a new fuse box. He estimated that the total expenditurefor these and related items paid for by him was about $15,000. At the expiration of his tenancy it was submitted the respondentswould gain the benefit of this expenditure. It was submitted that a new duration of 3, rather than 2 years, would be more reasonableas it would enable the applicant to enjoy the benefits of this relatively substantial expenditure for a longer period.
5. The respondent submitted that at present 2 years, rather than 3 years, is a common duration for domestic promises of this type. Wewere referred to the evidence of the respondent’s valuer, Mr. D. Yim on this point.
6. In the case of disagreement, the Tribunal under Section 119I has to fix such duration as is “reasonable in all the circumstances” subject to the new duration not exceeding 3 years. We recognisethat currently the majority of new Part IV tenancies are for 2 years. However, that is not an inflexible period and there are a numberof new tenancies for 3 year durations and some for durations of 1 year.
7. Here there is substance to the submissions of both parties. In the circumstances the period of the current tenancy and the natureof the recent expenditure borne by the applicant, just tilts the balance in favour of the longer duration of 3 years. We thereforein the exercise of our discretion the light of these facts order that the new tenancy, which shall commence on the 1st day of July1983, shall be for a duration of 3 years.
8. The original rent, as we have already observed, included the sum of $500 for hireage of furniture. The current tenancy agreementdoes not include any schedule itemising that furniture. At the hearing it was asserted by the applicant and accepted by the respondents,that during the current tenancy some furniture has been removed by the respondents and other items had been stored by the respondentsin the hall closet, the possession of which is reserved to the respondents under Clause 4(g) of the tenancy agreement. In the result,the applicant no longer has the use of any of the respondents furniture. Accordingly it was agreed that the new tenancy agreementwill not include any provision for the hireage of furniture. Further the new rent to be determined is in respect only of the unfurnishedsubject premises. No provision has to be made for the hireage of furniture.
9. The applicant did not call a valuer but submitted that the pre-vailing market rent was in the region of $16,000 per calendar monthexclusive of rates. The respondent called Mr. Derek Yim, chartered surveyor, who pro-duced his written report and an addendum whichwere also supplemented by oral evidence. Mr. Yin was of the opinion that the prevailing market rent, as at the 1st day of July 1983,was $21,000 per calendar month exclusive of rates.
10. In arriving at that rent he relied on 6 comparables However, two of these, for $20,000 and $18,500 respectively, were merely askingprices for two flats at Villa Monte Rosa which had remained vacant for some time and he appreciated that they were of little, ifany, weight. In his view, the best comparable was Unit D4 at Greenville Gardens. However, that flat was in an inferior locality andwas in respect of very much smaller premises of 1,208 square feet compared with the subject premises 2,486 square feet.
11. The better comparables from Mr. Yim’s list were clearly those available from Evergreen Villa and in particular the flat on the 19thfloor let for 2 years from the 15th day of June 1983 at $19,000 per calendar month exclusive, of rates and the flat on the 18th floorlet for 2 years from the 30th day of June 1983 at $18,000 per month. Mr. Yim had in fact relied on those two comparables as the basisfor reducing his original valuation of the subject premises of $22,000 per calendar month exclusive of rates as at the 6th day ofJune 1983, down to $21,000 per calendar month exclusive of rates as at the 1st day of July 1983.
12. We are satisfied from the evidence at the hearing our subsequent inspection of the subject premises and of Evergreen Vill, that whileboth developments are in the same general locality, the position and environment of Woodland Heights is noticeably superior to EvergreenVilla. Although Woodland weights is 19 years old and Evergreen Villa only 10 years old, the standard of construction, finish andmaintenance of Woodland Heights is better than Evergreen Villa. Woodland Heights is also a smaller development in which the flatsin 4 of the 6 blocks are of triplex design which are far more spacious than both the Evergreen Villa flats and the two single 1-velblocks of Woodland Heights. The subject premises form part of one of the single level block. The attractive environment of WoodlandHeights, in part created by the existence of the 4 blocks of triplex flats, is also enjoyed by the 2 single level blocks. The subjectpremises therefore benefit environmentally from the high standard of development and the superior surroundings of Woodland Heights.
13. We are of the view that flats at Woodland Heights in the 2 single level blocks including the subject premises, are superior to thecomparable flats in Evergreen Villa. Not only are they superior but if in good condition and in the exclusive possession of the tenant,they may well secure a prevailing market rent of $21,000 advanced by the respondents valuer. However, in the case of the subjectpremises there are also other matters to be taken into account which tend to reduce the prevailing market rent we might otherwisehave determined.
14. These other factors include the condition of the Kitchen and bath-rooms. The kitchen is markedly inferior to the condition that couldreasonably be expected in a property of this standard. Major renovations to the kitchen would be necessary if a landlord were toobtain the rent the principal rooms of the premises might otherwise command. The cupboards, in addition to being in poor condition,are approaching obsolecence. Structural work is desirable to supply satisfactory air vents for the gas appliances. Secondly, thebathrooms similarly require renovation. In these rooms too, structural work is necessary to provide air vents for the gas appliances.
15. After taking all these factors into account we determine the pre-vailing market rent of the subject premises to be $20,000 per calendarmonth exclusive of rates. We confirm that the new tenancy will commence on the 1st day of July 1983 for a duration of 3 years ata new rent of 320,000 per calendar month exclusive of rates. There will be no order as to costs.
DATED this 7th day of October, 1983.
Mr. J. Kan of N.M. Tsang & Co. for the applicant.
Mr. H. Chan of Johnson, Stokes & Master for the respondents.