Stamp Duty on Tenancy Agreements in Hong Kong

This article is written from the text of the Stamp Duty Ordinance (Cap. 117) in force from 26 February 2026. The rates used in this article are in Schedule 1, heads 1(1) and 1(2). The Ordinance does contain a power to change rates — section 63A: "The Financial Secretary may, by notice published in the Gazette, amend head 1(1AA), (1AAB), (1B) or (1C) in the First Schedule to effect a change to the rate of stamp duty set out in that head." The four heads that power reaches do not include heads 1(1) or 1(2), so the rates in this article can be changed only by amending Ordinance. Procedures and current announcements come from the Stamp Office of the Inland Revenue Department.

Introduction

The thing that goes wrong most often with Hong Kong tenancy stamp duty is not the rate. It is which rent figure you multiply.

Schedule 1 head 1(2) charges leases. Where the consideration or part of it is rent, head 1(2)(b) splits into four cases — not the three that circulate informally — and only one of them charges on the total rent over the whole term. The other three charge on the yearly or average yearly rent. Apply the first one's logic to the others and a two-year tenancy is assessed at double the true duty; a longer one, worse.

This article is ordered by what a reader actually needs: how much and how to work it out, then when and who, then what happens if it goes unpaid, and finally the situations that come up less often but matter a great deal when they do — money consideration other than rent, agreements for lease, rent increases, Government leases, and subdivided units.

What You Pay: Four Cases, Not Three

Head 1(2)(b), in the English authentic text, has four limbs:

<table>

<caption>Stamp Duty Ordinance (Cap. 117), Schedule 1 head 1(2)(b): the four cases, and the term, rate and base each states (version in force 26 February 2026).</caption>

<thead>

<tr><th>Case</th><th>Term as the Ordinance describes it</th><th>Rate and base</th></tr>

</thead>

<tbody>

<tr><td>(i)</td><td>"where the term is not defined or is uncertain;"</td><td>"25 cents for every $100 or part thereof of the yearly or average yearly rent"</td></tr>

<tr><td>(ii)</td><td>"where the term specified in the lease does not exceed one year;"</td><td>"25 cents for every $100 or part thereof of the total rent payable over the term of the lease"</td></tr>

<tr><td>(iii)</td><td>"where the term specified in the lease exceeds one year but does not exceed three years;"</td><td>"50 cents for every $100 or part thereof of the yearly or average yearly rent"</td></tr>

<tr><td>(iv)</td><td>"where the term specified in the lease exceeds three years"</td><td>"$1 for every $100 or part thereof of the yearly or average yearly rent"</td></tr>

</tbody>

</table>

In one line: only (ii) charges on the total rent over the term. Cases (i), (iii) and (iv) all charge on the yearly or average yearly rent.

Why this matters: at exactly one year, "the total rent payable over the term of the lease" and "the yearly or average yearly rent" are the same number, so the two bases look interchangeable. Past one year they separate immediately. The rate climbs from 25 cents to 50 cents to $1 precisely because the base shrinks from the whole term back to a single year — the rising rate compensates for the shrinking base rather than stacking on top of it.

How we read it: if you remember one thing, remember this — a two-year tenancy is not "the one-year duty times two". It is the yearly rent times 0.5%, once. The provision says "yearly or average yearly rent"; nothing in it tells you to multiply back up by the number of years.

The rates are expressed as cents per $100, not as percentages. 25 cents per $100 is 0.25%, 50 cents per $100 is 0.5%, $1 per $100 is 1%.

Working the Numbers

Every calculation below is worked from the statutory rates in the table above, to show how the provisions operate.

Example 1 — monthly rent HK$20,000, term specified as 1 year

Case (ii): total rent payable over the term = HK$20,000 × 12 = HK$240,000.

HK$240,000 ÷ 100 = 2,400 units of $100, at 25 cents each → HK$600.

Example 2 — monthly rent HK$20,000, term specified as 2 years

Case (iii): the base is the yearly rent, HK$240,000 — not the two-year total of HK$480,000.

HK$240,000 ÷ 100 = 2,400, at 50 cents each → HK$1,200.

— Not HK$2,400. There is no multiplication by the term. The two-year tenancy attracts twice the rate applied to the same one year of rent; the length of the term is already reflected in the move from 25 cents to 50 cents.

Example 3 — monthly rent HK$20,000, term specified as 3 years

Still case (iii) — "exceeds one year but does not exceed three years" includes three years exactly. Yearly rent HK$240,000 ÷ 100 = 2,400, at 50 cents each → HK$1,200, the same as the two-year tenancy.

Example 4 — monthly rent HK$20,000, term specified as 3 years and 1 month

Case (iv), "exceeds three years": yearly rent HK$240,000 at $1 per $100 → HK$2,400.

One extra month doubles the duty, from HK$1,200 to HK$2,400. The dividing line is "exceeds three years", and a single day crosses it.

Example 5 — five-year term with annual rent increases

Monthly rents across years 1–5 of HK$20,000, 20,000, 22,000, 22,000, 24,000 give yearly rents of HK$240,000, 240,000, 264,000, 264,000 and 288,000 — HK$1,296,000 over the five years.

The provision says "yearly or average yearly rent", so where the years differ you take the average yearly rent: HK$1,296,000 ÷ 5 = HK$259,200.

Case (iv): HK$259,200 ÷ 100 = 2,592, at $1 each → HK$2,592.

Example 6 — no term specified (for instance a month-to-month periodic tenancy)

Case (i): yearly or average yearly rent, 25 cents per $100. Monthly rent HK$20,000 → yearly rent HK$240,000 → HK$600.

Note that (i) carries the same 25-cent rate as (ii) but on the yearly rent rather than a term total.

Two cautions on this example. Whether a month-to-month tenancy is "not defined or … uncertain" under (i), or instead has a term specified as one month and so falls under (ii), is not resolved by the text — a monthly periodic tenancy can be characterised either way, and the two limbs would then charge on different bases. And annualising a monthly rent by multiplying by twelve to reach the "yearly rent" is a convention, not a statutory instruction.

"Or Part Thereof" — Two Separate Roundings, Both Upward

Two roundings operate in Cap. 117, and readers routinely merge them or take them for rounding to the nearest figure. Both round up. Neither rounds to the nearest. (The two roundings described in this section are Cap. 117's. Cap. 7 section 120AAZE sets two roundings of its own for the renewed rent of a regulated tenancy, and both go the other way — down. See "Instruments Increasing Rent: Section 17" below.)

The first is inside the rate: "or part thereof". This rounds the base up to the next $100 — it does not round the duty. A yearly rent of HK$240,050 is not 2,400.5 units of $100; it is 2,401 units.

The second is section 18A, which operates on the sum finally payable:

So a computed HK$600.25 is payable as HK$601 — again upward, and not discarded.

Most relevant to: anyone whose rent is not a round figure. Take a one-year tenancy at HK$20,841 a month: total rent HK$250,092, divided by 100 gives 2,500.92, and the first rounding takes that up to 2,501 units of $100. At 25 cents each that is HK$625.25, and section 18A takes it up to HK$626. HK$625.25 is the correct intermediate figure, before section 18A. Multiplying HK$250,092 by a flat 0.25% on a calculator gives HK$625.23, which is not even that — it skips the first rounding. The amount payable is HK$626.

Consideration Other Than Rent: the Limb Is Wider Than "Key Money"

Key money, construction fee, entry payment, premium — these are the market's words, not the Ordinance's. None of them appears anywhere in Cap. 117, in either language. The statute draws its line somewhere else.

Head 1(2)(a) reads:

Three things to read separately:

• What is charged is any non-rent money consideration, whatever the parties call it. The label does not decide whether the limb applies.
• It covers not only money but stock or security.
• The sum need not move to the landlord: the words are "or to any other person". The requirement remains that the sum be consideration for the lease — not every payment mentioned in the tenancy qualifies. Fitting-out money paid to a nominated contractor is usually the price of the works rather than consideration for the lease; money paid to an outgoing tenant is usually consideration under a separate surrender or assignment, chargeable in its own right. What the limb widens is the recipient, not the meaning of "consideration".

So more tenancies engage this limb than the question "is there key money?" suggests. Once engaged, the calculation is nothing like the table above:

The parenthesis is where the work happens. Note 1 to head 1(1) — replaced by 3 of 2026 s. 14, so this is the current text — provides:

Strike out paragraphs (a) to (l), then strike the words "in any other case" from paragraph (m), and all that is left standing in Scale 2 is paragraph (m)'s rate itself. Scale 2 paragraph (m) reads: "6.5% of the amount or value of the consideration" (added by 3 of 2026 s. 14). Scale 3 paragraph (k) reads: "4.25% of the amount or value of the consideration".

The result:

<table>

<caption>Stamp Duty Ordinance (Cap. 117), Schedule 1 head 1(1) Note 1, Scale 2 paragraph (m) and Scale 3 paragraph (k) (version in force 26 February 2026); Note 1 was replaced, and those two paragraphs added, by the Stamp Duty (Amendment) Ordinance 2026 (3 of 2026), section 14.</caption>

<thead>

<tr><th>Property</th><th>Rate on the money consideration, where the lease also reserves rent</th></tr>

</thead>

<tbody>

<tr><td>Residential</td><td><strong>6.5%</strong>, flat, no bands</td></tr>

<tr><td>Non-residential</td><td><strong>4.25%</strong>, flat, no bands</td></tr>

</tbody>

</table>

How we read it: this is the most counter-intuitive point in the article. The natural assumption is that a modest premium falls into a low band, or even the HK$100 nominal charge. Note 1 does the opposite: it deletes every band and the words "in any other case", so the residual rate applies to the whole sum however small it is. HK$200,000 of key money on a residential tenancy is HK$13,000 on that sum alone.

The two charges are cumulative, not alternative. Section 10(4): "Subject to section 16(1), an instrument made for any consideration by reference to which it is chargeable with stamp duty, and also for any further or other valuable consideration or considerations, shall be separately and distinctly charged, as if it were a separate instrument, with stamp duty in respect of each of the considerations." The rent is charged once under head 1(2)(b), and the money sum is charged again under head 1(2)(a). Both stand.

The bands themselves carry a certification condition. Each of the paragraphs (a) to (l) that Note 1 strikes out is conditioned on the instrument being "certified in accordance with section 29" at the relevant amount. Section 29(2)(b) defines that amount for a lease: "in relation to stamp duty chargeable on a lease or agreement for a lease, as a reference to the amount or value of the consideration in money, stock or security, other than rent." Those closing words — other than rent — are the textual basis for this article's phrase "non-rent money consideration".

A different route, where the rent is inadequate — Note 1C. Note 1's condition is that "part of the consideration … consists of rent". A separate path exists: Note 1C provides that "Scale 2 of this sub-head applies in relation to the stamp duty chargeable on a lease of residential property or an agreement for a lease of residential property if the lease or agreement is chargeable with stamp duty as a conveyance on sale under section 27(1) by virtue of section 27(4)" (Scale 3 for non-residential). Note 1C contains no deletion instruction — so a lease charged as a conveyance on sale through section 27(4) keeps the bands intact, the opposite of Note 1's effect.

Where a lease reserves no rent at all, Note 1's condition is not met, and which scale then applies is unclear: the Schedule contains no provision selecting a scale for a head 1(2)(a) charge, and s.29AI, which lays down the general scale-selection rule for conveyances on sale, is expressed for "a conveyance on sale" and opens with carve-outs naming ss.29AIA and 29AJ to 29AS and Notes 1B and 1C — but not Note 1. The Schedule note that speaks to scale selection generally is Note 1A: "This sub-head applies to a conveyance on sale according to section 29AI" — which sends the reader back to s.29AI, itself written for a conveyance on sale, and so does not select a scale for a head 1(2)(a) charge either.

Why the Deposit Is Excluded

The deposit sits outside the base — but not because the Ordinance exempts it. There is no such provision. It sits outside because of the charging words themselves: head 1(2)(b) charges where "the consideration or any part of the consideration is any rent", and a deposit is not rent. It is security for performance, returnable at the end of the term. It does not fall within the charging words, so it is not charged.

The distinction has practical bite. A sum labelled a "deposit" that is in truth non-refundable — prepaid rent, or an entry payment — is not made into a deposit by its label.

Counterparts: Head 4, Not Head 1(2)

Landlord and tenant each holding a stamped counterpart is ordinary Hong Kong practice. The duty on the counterpart comes from Schedule 1 Head 4: DUPLICATES AND COUNTERPARTS, which is a separate charge from the duty on the lease:

So a counterpart is HK$5. The alternative branch — "the same stamp duty as on the original" — only bites where the original's duty is under $5, which a tenancy will rarely produce.

Read the deadline limb to its end: it is not 7 days. The second half of (B) gives the longer of 7 days and whatever period the original allows — and a lease has 30 days under head 1(2)(B). A tenancy counterpart therefore runs to 30 days.

Column (C) is blank — and a blank column is not the absence of a requirement. Head 4's column (C), which names the person liable to stamp, reads only "—", followed by "And see section 8". Section 8 is the requirement: the duplicate or counterpart of an instrument chargeable with stamp duty "shall not be duly stamped unless— (a) it is stamped as an original instrument; (b) there is denoted on it payment of the stamp duty paid in respect of the original instrument of which it is the duplicate or counterpart; or (c) there is denoted on a stamp certificate issued for the duplicate or counterpart payment of the stamp duty paid in respect of the original instrument of which it is the duplicate or counterpart." So paying the HK$5 is not the end of it: payment on the original has to be denoted on the counterpart or on its stamp certificate.

The Note to Head 4 adds that where duty on a lease is limited to 50% by section 42(2) or 43(2), the duty on its duplicate or counterpart is limited to 50% as well.

Agreements for Lease and the Lease Itself: the $3 Is Double-Duty Relief, Not a Rate

Section 16(2):

So the agreement itself already bears the full lease duty. If the formal lease later executed under that agreement bore the full duty again, the same transaction would be taxed twice. Head 1(2)(c) is the answer:

The instrument head 1(2)(c) describes is a "Lease executed in pursuance of a duly stamped agreement for lease"; column (A) charges "$3", column (B) gives "30 days after execution", and column (C) names "All parties, and all other persons executing".

The HK$3 is therefore not a cheap band; it is relief from double duty. The full amount was paid at the agreement stage and the lease pays a nominal sum. The condition is that the agreement was duly stamped — if the agreement was unstamped or under-stamped, the lease does not get the HK$3 treatment.

Instruments Increasing Rent: Section 17

Three things. An instrument increasing rent is charged as a lease. It is charged only on the increase, not on the new rent in full. And an instrument made solely to give notice of the increase in compliance with an Ordinance is outside the section.

Be careful about how far that last limb reaches. Part IVA of Cap. 7 has no statutory rent-increase notice — it does the opposite. The opening words of section 120AAZD(1) are the anti-contracting-out limb and should not be dropped: "Subject to subsection (3), despite any provision of a regulated tenancy or any subsequent agreement between the landlord and tenant, the amount of rent payable by the tenant for the term of the tenancy—(a)must remain the same; and(b)may not be altered during the term." A rent-review clause in the tenancy itself, and any later agreement between the parties, are both caught. Section 120AAZD(2) provides that "An alteration of the amount of rent during the term is void and has no effect"; and s.120AAZD(3)–(4) permit the landlord only to reduce the rent, and require written notice to the tenant before the reduction.

A regulated tenancy's rent can rise only at renewal, through a second term offer made in Form AR1 — s.120AAS(2): "The second term offer may only be made in Form AR1". That is a new tenancy, not a notice. And renewal is not a free reset of the rent. Section 120AAZE(2) provides that "The maximum percentage for an increase of rent for the second term tenancy is to be the lower of the following—" (a) the control percentage ascertained by the formula in that paragraph, which works off the Rating and Valuation Department's territory-wide rental index for private domestic properties, and (b) 10%. Section 120AAZE(4) adds that where the control percentage is negative, the rent "is to be reduced at least by that percentage". Three further limbs of the same section should not be dropped. What the percentage is applied to is fixed by section 120AAZE(6): "If the amount of rent payable by the tenant has been reduced one or more times during the first term tenancy, the basis for calculating the amount of rent for the second term tenancy is to be the amount of rent last reduced during the first term tenancy." So where the rent was reduced during the first term, the base is the last reduced amount, not the rent originally agreed. And both of the section's roundings go down: section 120AAZE(3) provides that "The control percentage is to be rounded down to 1 decimal place." and section 120AAZE(5) that "The maximum amount of rent for the second term tenancy calculated in accordance with subsection (2) or (4) is to be rounded down to the nearest integer." That is the opposite direction from the two Cap. 117 roundings described earlier in this article; the two sets belong to two different Ordinances and do not carry across. The cap is not advisory: section 120AAS(4) provides that "The proposed amount of rent must not exceed the maximum amount of rent for the second term tenancy that is permitted under section 120AAZE." How the offer instrument is itself charged falls to be judged under head 1(2) on its own terms.

What is certain is that the notice of increase which the section 17 proviso exempts does not exist in Part IVA. That statement is scoped to Part IVA. Parts I and II of Cap. 7 do contain sections headed "Notices of increases" — sections 10G and 61, both requiring "a notice of increase in the specified form" — but those Parts expired at midnight on 31 December 1998 under sections 48(1) and 74B(1) respectively. This article deals with Cap. 117 and Cap. 7; whether some other Ordinance requires a notice of increase is outside its scope.

See also section 16(1), which has more than one limb — and the two authentic texts do not match on the second. The English reads: "A lease or agreement for a lease shall not be charged with stamp duty in respect of any penal rent, or increased rent in the nature of a penal rent, thereby reserved or agreed to be reserved or made payable, or by reason of being made in consideration of the surrender or abandonment of any existing lease of or agreement relating to the same subject matter." On its face "by reason of being made in consideration of the surrender…" attaches to the charging, which would be a relief on a surrender and regrant. The equally authentic Chinese attaches the surrender words to the penal rent instead: 「…或作為退回或放棄(就同一標的物而訂立的)現有租約或有關協議的代價而規定須繳付懲罰租金或具懲罰租金性質的增收租金，則不得按上述懲罰租金或具懲罰租金性質的增收租金而就該租約或租約協議徵收印花稅。」 What both texts share is that penal rent, and increased rent in the nature of penal rent, are never part of the base. Whether the English also gives a separate relief on a surrender and regrant is unclear.

Rent in a Foreign Currency: Section 18

Where rent is expressed in a currency other than Hong Kong dollars, section 18(1) substitutes the Hong Kong dollar equivalent "at the rate of exchange prevailing on the date of the instrument". Section 18(2) defines that rate as "the buying rate for the currency in question, as determined by the Monetary Authority, for telegraphic transfers at the commencement of business on the date of the instrument or, if that date is a Sunday or a general holiday, on the business day immediately preceding that date".

The date that fixes the rate is the date of the instrument — not the date duty is paid, and not any date during the term. Currency movement after signing does not disturb a base that is already fixed.

Who Is Liable, and for How Long

Column (C) of head 1(2) names the persons liable as "All parties, and all other persons executing"; the Chinese authentic text at the same column reads 「所有買賣各方，以及所有其他簽立人」. The two authentic texts do not match here: the Chinese uses 買賣各方, the language of a sale, while the English is the general "All parties". A lease is not a sale, and the English is on its face the wider formulation. This article states only what the two texts share — the landlord, the tenant, and everyone who executes the tenancy.

Section 4(3) sets out the scope and the character of that liability:

Two points are easy to miss:

• The provision reaches "any person who uses such instrument" — liability is not confined to those who signed.
• Liability is joint and several, and the Collector may proceed "without reference to any civil liability of such person inter se". In other words, a clause saying "the tenant bears 100% of the stamp duty" binds the landlord and tenant to each other; it does not bind the Collector. The Collector may still pursue the landlord for the whole amount, leaving the landlord to recover from the tenant under the contract.

Section 4(5) sets the limitation period: "No action shall be brought by virtue of subsection (3), (3AA) or (4) or section 45(5A)(c) for the recovery of any stamp duty with respect to any instrument more than 6 years from the expiration of the time for stamping such instrument." The subsection names the actions it covers — those brought by virtue of subsection (3), (3AA) or (4) or section 45(5A)(c) — and a tenancy falls under subsection (3); subsections (5A) and (5C) set their own six-year periods for other situations. The six years run from the expiry of the 30 days, not from execution and not from discovery.

On market practice, a 50/50 split between landlord and tenant is common in residential tenancies, but that is convention and not law — the Ordinance says nothing about how the cost is apportioned. Set out expressly in the agreement both who bears the cost and who does the paperwork; the most common cause of a missed deadline is each side assuming the other is handling it.

When to Pay

Column (B) of head 1(2): "30 days after execution".

The clock runs from the date of execution — not from the start of the term and not from handover. A tenancy signed a month before the term begins has its 30 days running from the day it was signed.

How to Pay

• Online (e-Stamping) — submission and payment can be made online.
• Through a letting agent — where the tenancy is arranged through an agent, the agent commonly handles the process; whether a separate service fee applies varies by agent.
• In person or by post to the Stamp Office — lodge the tenancy and payment; the Stamp Office issues a stamp certificate.

A stamp certificate and a conventionally impressed stamp are the same thing so far as the Ordinance is concerned — which comes from the section 2 definition of "stamped" itself:

Note the condition on (b): once a certificate is cancelled under Part IIA, the instrument ceases to be "stamped". Part IIA (ss.18D–18J) governs the issue of stamp certificates, their form (paper or electronic record), and their cancellation.

Late Stamping: the Ordinance Says "Penalty", and It Can Be Remitted

Section 9(1) opens with an exception — "Except in the case of an instrument to which section 5(5) or 13(7)(a) applies" — so the tiers below are not universal. Subject to that, it sets three tiers, divided at 1 month and 2 months:

<table>

<caption>Stamp Duty Ordinance (Cap. 117), section 9(1): the three penalty tiers for late stamping (version in force 26 February 2026).</caption>

<thead>

<tr><th>Delay</th><th>The amount the provision sets</th></tr>

</thead>

<tbody>

<tr><td>"if the instrument is so stamped not later than 1 month after the time for stamping"</td><td>"the penalty shall be double the amount of the stamp duty"</td></tr>

<tr><td>"if the instrument is so stamped later than 1 month but not later than 2 months after the time for stamping"</td><td>"the penalty shall be 4 times the amount of the stamp duty"</td></tr>

<tr><td>"in any other case"</td><td>"the penalty shall be 10 times the amount of the stamp duty"</td></tr>

</tbody>

</table>

Note that the tiers run from the time for stamping, not from execution — and a tenancy's time for stamping is itself 30 days after execution, so the two are a month apart. The dividing lines are 1 month and 2 months — not 30 days / 3 months / 6 months.

The word the Ordinance uses is penalty, not surcharge. And section 9(2) provides: "The Collector may remit the whole or any part of any penalty payable under subsection (1)." Section 9(3) adds that payment or remission may be denoted on the instrument by the Collector.

To state the 10× tier precisely: section 9(1)(c) fixes the penalty for "in any other case" at 10 times the duty as a determinate multiple. It is not a range running up to 10×, and not a ceiling the Collector chooses within — the subsection gives no discretion to pick a lower multiple. The mechanism that can reduce it is the separate section 9(2) power to remit. The Ordinance sets no criteria for exercising that power.

Working the numbers: duty of HK$600, more than two months late — penalty HK$6,000, HK$6,600 payable in total. On a one-year tenancy at HK$20,000 a month, letting it slide into the third month costs a third of a month's rent.

If It Is Not Duly Stamped: Section 15 Has More Exceptions Than Are Usually Quoted

The familiar statement is that an unstamped tenancy cannot be used in court. That is the principle in section 15(1) — but the subsection itself carries exceptions, and section 15(1A) adds two routes.

Section 15(1):

Section 15(1A):

So an unstamped tenancy is not automatically unusable in civil proceedings: the court may order it received on a solicitor's personal undertaking to have it stamped and any section 9 penalty paid. That is a real route, not a theoretical one. But the undertaking is personal to the solicitor, and the duty and penalty still fall due — it is a remedy, not a way of avoiding the cost.

Section 15(2) imposes a parallel restriction — and it carries its own exceptions:

So the same section 14(1C) endorsement route is available here too, the subsection is subject to the section 15(3) registration carve-outs, and the level 2 penalty falls on the public officer or body corporate that fails to comply — it is not a sanction on the landlord or tenant. (Fine levels are not set by Cap. 117: the scale sits in Schedule 8 to the Criminal Procedure Ordinance (Cap. 221), which lists an amount against each level. This article cites levels, not amounts.)

Government Leases and Consular Premises: 50% Relief

Section 42 applies to a lease or agreement for a lease made between the Central People's Government, the Government, or an incorporated public officer, and "any other person (the other party) not being a person to whom section 43(1) applies" (other than an instrument to which section 39 applies). That last limitation matters: if the counterparty to a Government lease is itself an exempted person under section 43(1) — a consular party, say — the instrument falls outside section 42 and into section 43. Section 42(2):

The other party pays 50%, and paying that 50% is deemed to constitute payment of the duty on the instrument — the remaining half is not left outstanding against the Government side; the instrument is fully stamped.

Section 43 does the parallel thing for consular ("exempted") premises. Section 43(1) relieves the exempted person of liability for the duty and for any section 9 penalty; section 43(2) fixes the other party's obligation at 50%, again deemed to constitute payment.

Section 43(2) carries the same two carve-outs as section 42, and they matter as much here. What it covers is "Every lease or agreement for a lease (other than an instrument to which section 39 applies) made in respect of exempted premises between an exempted person, or a person acting on behalf of an exempted person, and any other person (other than the Central People’s Government, the Government, an incorporated public officer or an exempted person)". So instruments to which section 39 applies are outside it; and if the counterparty is itself the Central People's Government, the Government, an incorporated public officer or another exempted person, the 50% arrangement does not apply either.

Exempted premises and exempted persons are certified by the Chief Secretary for Administration under section 43(3) — a power that operates by reference to four other Ordinances: the Consular Relations Ordinance (Cap. 557), the Privileges and Immunities (Joint Liaison Group) Ordinance (Cap. 36), the Privileges and Immunities (International Committee of the Red Cross) Ordinance (Cap. 402), and the International Organizations (Privileges and Immunities) Ordinance (Cap. 558). The Cap. 558 limb is the narrower one: what section 43(3) reaches there is premises or persons exempt from taxation under an order made under section 3 of that Ordinance, not under the Ordinance directly.

As noted above, the Note to Head 4 carries the same 50% through to counterparts.

Subdivided Units: the Notice of Tenancy Is Not Just Paperwork

A tenancy of a subdivided unit regulated under Part IVA of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7) carries a second obligation running alongside stamp duty. A note on the words: the Ordinance does not use the colloquial 劏房 at all; its term is 分間單位 / "subdivided unit", and a tenancy inside the regime is a 規管租賃 / "regulated tenancy". Section 120AAZT(2):

60 days, running from commencement of the term — a different clock from the stamp duty 30 days, which runs from execution. Both must be met on their own terms.

Failure bites at two levels. First, criminal: section 120AAZT(3) makes it an offence for the landlord to refuse or neglect to comply without reasonable excuse, and section 120AAZT(4) provides that the landlord "is liable on conviction to a fine at level 3, and in the case of a continuing offence, to a further fine of $200 for each day during which the offence continues". (Again, the amount behind "level 3" is in Schedule 8 to Cap. 221, not in Cap. 7.) And conviction does not discharge the obligation: section 120AAZT(5) provides that "On a person’s conviction of an offence under subsection (3), the magistrate may, in addition to any penalty that may be imposed, order the person to, within a time specified in the order, submit the notice to the Commissioner." The order comes in addition to any penalty imposed, so paying the fine is not an alternative to submitting the notice.

The second level is the one with real teeth. Section 120AAZU(1) requires the Commissioner, on receiving the notice, to endorse it with the date of receipt and notify landlord and tenant. Section 120AAZU(2):

How we read it: this is not simply a fine — without the endorsement, the landlord cannot pursue the rent. The English text says the landlord "may not maintain an action"; the equally authentic Chinese says 「業主不得採取法律行動，追收有關租賃下的租金」, which is the language of not bringing one. Reading the two together, the bar reaches the bringing of the action and not merely its continuation. A landlord of a subdivided unit with an unstamped tenancy and no notice submitted faces two separate obstacles: Cap. 117 section 15 (whether the document can be used), and Cap. 7 section 120AAZU(2) (the rent action itself). They must be cured separately; fixing one does nothing for the other.

The Ordinance itself says only "a notice in the specified form" and gives it no number. "AR2" is not the statute's word — Cap. 7 gives this notice no form number (the form the Ordinance does name is Form AR1, used for a second term offer). Any designation in circulation is administrative and can change when forms are revised.

And the "specified form" requirement is itself one the Commissioner can waive. The term "specified form" is not defined in section 120AAZT; it has to be followed to section 120AAZZG, which provides that "(1) The Commissioner may specify the forms to be used under this Part", "(2) The Commissioner may publish in the Gazette any form specified under subsection (1)", and — the limb that matters to a landlord who used the wrong paper — "(3) The Commissioner may, if considered appropriate, accept any notice or application submitted to the Commissioner that is not in the specified form." So using the wrong form is not automatically a failure to submit. But that is the Commissioner's discretion, not the landlord's right: the section states no criteria for its exercise. The operative gate remains the section 120AAZU(1) endorsement.

Related guides: see also tenancy agreement terms , ending a tenancy , property stamp duty , and the Basic Housing Units regime , or browse our Hong Kong landlord and tenant overview .