Break Clause
Early termination is not usually allowed unless by mutual consent or by finding a replacement tenant. The landlord may request a break clause for himself for either sale or redevelopment purposes.
Effective Rate
This is the average rate per month over the term of the lease and factors in any rent free period ie. multiply the number of months rent is paid and divide by the number of months in occupation.
Efficiency Rate
The difference between gross/lettable area and net usable area - ranges from 65% to 90% of the gross area depending on the building and whether the space occupies a whole floor. Net areas are usually 100% efficient.
Floor Area
Gross area (G)
Includes toilets, lift lobby, staircases, plant room etc. but excludes the lifts.
Lettable area (L)
Very similar to gross but doesn't include staircases and plant rooms.
Net area (N)
The enclosed internal space which can include the lift lobby, but excludes everything else.
Handover Condition
Most landlords offer premises in ‘bareshell' condition. Standards do vary considerably, but in most Grade A buildings the landlord will provide inter-tenancy partitions, raised or screed floor, and suspended ceilings with light boxes. The primary air-conditioning plant will be provided, but secondary ducting as well as all electrical wiring will be the tenant's responsibility. Secondary buildings may have no ceiling or screed floor.
Lease Term
Normally 2-3 years. Longer leases are possible (6-9 years) for large space, but will normally incorporate rent reviews at 3 year intervals.
Options to Renew
These are common, but not always available. Rent will be set at the prevailing market rate at the time of renewal negotiations, and settled by an arbitrator in the event of any dispute.
Reinstatement
At the end of a tenancy, landlords will usually require the tenant to reinstate to original bare condition, even if the tenant took over the space as a fitted unit.
Rent Free Period
Usually given during the fitting out period. Sometimes a rent free holiday is given within a lease term, but often depends upon the landlord and the agreed signing rate.
Rental
Quoted in HK$ per sq ft per month on gross/lettable/net area, exclusive of service charge.
Service Charge
Usually between $3.00 and $9.00 per sq ft per month and covers costs like centralized air-conditioning, cleaning and maintenance of common parts.
