Government rent and land leases

You do not own the land under your flat. Virtually all land in Hong Kong is held on a government lease rather than freehold. The government rent you pay is the fee for that lease – a charge for the right to occupy the land, separate from the property itself. Unlike freehold systems where land ownership is permanent, Hong Kong land is leased for a fixed term, and the rent is the consideration for that grant.

How government rent works

Government rent is payable under the terms of the land lease between the government and the landowner (typically the developer or current flat owner). The amount depends on when the lease was granted, and the system divides leases into two broad categories.

Leases granted before 27 May 1985 (old leases)

Most leases on Hong Kong Island and in Kowloon south of Boundary Street that were granted before 27 May 1985 carry a nominal fixed rent – often just a few hundred dollars a year. This rent does not change with property values. The government rent for these properties is collected by the Lands Department, not the Rating and Valuation Department (RVD). If your flat is in an older building in these areas, your government rent is almost certainly a trivial sum. However, you should confirm this with the Lands Department because some pre-1985 leases have been renewed or extended under different terms.

Leases granted on or after 27 May 1985 (post-1985 leases)

For all leases granted on or after 27 May 1985, and for leases in the New Territories and New Kowloon north of Boundary Street (including most land in the New Territories), government rent is set at 3% of the rateable value under the Government Rent (Assessment and Collection) Ordinance. This applies to:

• All land in the New Territories and New Kowloon north of Boundary Street
• Leases extended under the New Territories Leases (Extension) Ordinance
• Nearly all new development leases across Hong Kong since 1985

The rateable value is the estimated annual rental income of your flat if let on the open market, assessed by the RVD. For the 2026-27 financial year, the valuation reference date is 1 October 2025, and the rateable values take effect from 1 April 2026. Government rent is adjusted in step with any later change in the rateable value – so if your flat’s rateable value goes up, your government rent rises proportionally.

The formula is straightforward: government rent = 3% of the current rateable value, split into quarterly payments. For example, if your flat’s rateable value is $360,000 (hypothetical), your annual government rent would be $10,800, paid as $2,700 per quarter.

Government rent versus rates

Rates are a separate charge, also based on rateable value, but calculated at a different percentage. For the 2026-27 financial year:

• For domestic properties with a rateable value at or below $550,000: 5% of rateable value
• For domestic properties with a rateable value above $550,000: 5% on the first $550,000, 8% on the next $250,000, and 12% on the portion above $800,000
• For non-domestic properties: 5% of rateable value

Both charges appear on the same RVD demand note, but they are distinct obligations. Rates fund government services (e.g., police, fire, education). Government rent is the land-lease payment. If you own a flat, you must pay both. If you rent, your landlord may pass both to you under the tenancy agreement – check your lease terms.

The critical difference: rates apply to all properties, while government rent applies only to leasehold properties (i.e., virtually all private land in Hong Kong). Also, rates can be progressive for high-value domestic properties, but government rent is always a flat 3% regardless of value.

Why lease expiry dates matter for mortgages

Every land lease in Hong Kong has an expiry date. For post-1985 leases in the New Territories, this is typically 50 years from the date of grant. For older urban leases, the expiry dates vary – many run to 2047. Banks care deeply about the remaining lease term when deciding whether to grant a mortgage.

A mortgage is secured against the property. If the lease has fewer years left than the mortgage term, the bank may refuse to lend or demand a higher down payment. For example, a 30-year mortgage on a lease expiring in 20 years would leave the bank with no security after expiry, unless the lease is renewed. Most leases in Hong Kong are extendable by 50 years under the New Territories Leases (Extension) Ordinance or the 1997 land grant policy, but banks still factor in the current expiry date.

Before buying a flat, ask the seller or your solicitor for the lease commencement date, expiry date, and any extension terms. You can also check the land register at the Land Registry for a small fee. The RVD will not provide this – it is a lands matter.

How to find out what applies to your property

To determine which government rent regime applies to your flat:

1. Check the address. If your property is in the New Territories or New Kowloon north of Boundary Street, or if the lease was granted in 1985 or later, government rent at 3% of rateable value almost certainly applies.
2. Check the land register. This will show the lease date, expiry, and any special conditions. Your solicitor can do this during due diligence.
3. Look at your RVD demand note. The quarterly bill will show both rates and government rent separately. If you see a line for government rent, it is the 3% figure (for post-1985) or a nominal amount (for old leases).
4. Ask the RVD directly. They can confirm the rateable value and whether government rent applies to your property under the Government Rent (Assessment and Collection) Ordinance. Contact the Rating and Valuation Department for the current rateable value and rent calculation – do not rely on memory or estate agent estimates.

What to check or do next

If you are buying a flat, verify these three things before committing:

• Lease expiry date. Confirm it with the land register and ask your bank if the remaining term is acceptable for your mortgage.
• Current government rent and rates amounts. Ask the seller for recent demand notes, then cross-check with the RVD. A call to the RVD hotline or a visit to their website can confirm the rateable value and whether government rent at 3% applies.
• Whether your property falls under old or post-1985 rules. If it is an old lease on Hong Kong Island or Kowloon south, your government rent may be nominal – but confirm that the lease has not been extended or varied, which would bring it under the 3% regime.

Government rent is not usually a make-or-break cost – for a flat with a rateable value of $500,000, it amounts to $15,000 a year. But an unexpired lease of only 40 years might make a 30-year mortgage impossible. Prioritise the lease term check; the rent itself is predictable and manageable if you know the system.