As a tenant, understanding the various fees and costs associated with renting a property can be overwhelming. One fee that often causes confusion is the stamping fee for a tenancy agreement. In this article, we will provide a comprehensive guide to help you understand how the stamping fee is calculated and what you need to know about it.

What is a stamping fee?

A stamping fee is a fee levied on legal documents, including tenancy agreements, by the government to make them legally binding. The fee is paid to the Inland Revenue Department (IRD) and is calculated based on the length of the tenancy agreement and the monthly rent.

How is the stamping fee calculated?

The stamping fee calculation is relatively straightforward. The formula is as follows:

Stamping Fee = (Monthly Rent x Number of Months) x 0.25%

For example, if the monthly rent is HKD 10,000 and the tenancy agreement is for 12 months, the stamping fee would be calculated as follows:

Stamping Fee = (10,000 x 12) x 0.25%

= HKD 300

This calculation assumes that the monthly rent remains unchanged throughout the entire tenancy. If the rent changes, the stamping fee will need to be recalculated.

Who is responsible for paying the stamping fee?

According to the law, the landlord and tenant are jointly responsible for paying the stamping fee. However, it is common practice for the tenant to bear the cost. In most cases, the stamping fee is paid by the tenant when the tenancy agreement is presented for stamping.

When should the stamping fee be paid?

The stamping fee must be paid within 30 days of the tenancy agreement being executed. Failure to pay the fee within this period may result in a penalty and the agreement becoming unenforceable.

What happens after the stamping fee is paid?

Once the stamping fee is paid, the tenancy agreement will be stamped by the IRD. The landlord and tenant will each receive a copy of the stamped agreement. The stamped agreement is the legal proof of the tenancy and should be kept in a safe place for future reference.

In conclusion, the stamping fee for a tenancy agreement is an important consideration for tenants in Hong Kong. Understanding how it is calculated and who is responsible for paying it can help ensure a smooth and legal tenancy agreement. As always, it is recommended to seek professional advice if you have any questions or concerns about stamping fees or other aspects of renting a property in Hong Kong.