Rates: what they are and how they are calculated

Rates are a tax on occupation of property in Hong Kong, not a tax on ownership or capital value. You pay them because you occupy a flat, shop, or office, whether as an owner-occupier or a tenant. The amount you owe is calculated as a percentage of the property's rateable value, which is the government's estimate of the annual rent the property could fetch on the open market at a fixed valuation date. Rates are billed quarterly in advance by the Rating and Valuation Department (RVD).

Rateable value: the foundation of your rates bill

Rateable value is not the market price of your flat. It is the estimated annual rental value at a specific reference date. For the current financial year (2026-27), the valuation reference date is 1 October 2025, and the rateable values determined from that date take effect from 1 April 2026. The RVD reassesses all properties annually to reflect changes in rental market conditions, so your rateable value can go up or down each year.

To understand what your rateable value means: if a similar flat in your building would rent for $300,000 per year, your rateable value will be around that figure. It bears no direct relation to the flat's sale price. A $10 million flat with a low rental yield will have a lower rateable value than a $6 million flat in a high-rent area.

How rates are calculated

Rates are a percentage of the rateable value. The percentage differs depending on whether the property is domestic (residential) or non-domestic, and for domestic properties, on the size of the rateable value. The rates for the 2026-27 financial year are as follows, verified against the Rating and Valuation Department:

• Non-domestic properties (commercial, industrial): 5% of the rateable value.
• Domestic properties with a rateable value at or below $550,000: 5% of the rateable value.
• Domestic properties with a rateable value above $550,000: a progressive rate applies. You pay 5% on the first $550,000, 8% on the next $250,000 (i.e., the portion from $550,001 to $800,000), and 12% on any portion above $800,000.

Worked example (hypothetical): A domestic flat has a rateable value of $1,000,000. The rates bill for the year would be: 5% of $550,000 = $27,500; plus 8% of $250,000 = $20,000; plus 12% of $200,000 = $24,000. Total: $71,500 per year. Billed quarterly, that is $17,875 per quarter.

Who pays: occupier vs landlord

By law, the occupier is liable for rates. In practice, the lease agreement usually determines who pays. Most residential tenancy agreements in Hong Kong state that the landlord pays rates and the tenant pays government rent (see below). But this is a contractual arrangement, not a legal requirement. If the lease is silent, the occupier is liable. Always check your tenancy agreement to see who bears the rates cost. If you are an owner-occupier, you pay both rates and government rent directly.

Government rent: a separate but related charge

Government rent is a separate charge, also based on the rateable value, but it is not a tax on occupation. It is the rent payable to the government for the land your property sits on. The rate is 3% of the rateable value, under the Government Rent (Assessment and Collection) Ordinance. This rent is adjusted automatically whenever the rateable value changes.

Government rent applies to:

• Land in the New Territories and in New Kowloon north of Boundary Street.
• Leases that were extended under the New Territories Leases (Extension) Ordinance.

For properties on Hong Kong Island and in Kowloon south of Boundary Street where the lease was granted before 27 May 1985, government rent is collected by the Lands Department instead, under different rules. If you own such a property, you likely pay a nominal ground rent (often $1,000 per year) rather than 3% of rateable value. Check your title deeds or ask the Lands Department.

Government rent is usually billed together with rates on the same quarterly demand note, but it is a distinct charge.

Annual revaluation and how it affects you

The RVD revalues all properties each year. The new rateable values are announced around March and take effect on 1 April. If your area's rents have risen, your rateable value will increase, and your rates and government rent will rise accordingly — even if you have not moved or renovated. The revaluation is based on rental evidence from the preceding 12 months, so it lags behind the market.

If you believe your rateable value is too high, you can object. The objection must be made in writing to the RVD within the statutory period — usually within 28 days of the date the valuation list is published. You must provide evidence, such as recent rental comparables for similar flats in your building or estate. The RVD will review your case and may adjust the value. If you are still unsatisfied, you can appeal to the Lands Tribunal.

Rates concessions and relief

The government has periodically granted concessions on rates, such as a flat-rate waiver (e.g., a cap of $2,500 per quarter) or a percentage reduction for a specific financial year. These are not permanent and are announced in the annual Budget. For the 2026-27 year, you should check the RVD website or the Budget speech to see if any concession applies. Concessions are typically applied automatically to your bill — you do not need to apply.

There is no permanent exemption for owner-occupiers or first-time buyers. Rates are payable regardless of whether you own or rent.

Billing and payment

Rates and government rent are billed together quarterly in advance. The demand note is sent to the occupier's address. Payment is due by the end of the month following the issue date. Late payment incurs a 5% surcharge, and further penalties if unpaid after six months. You can pay via autopay, online banking, or at convenience stores.

What to check or do next

If you are buying a flat, ask your solicitor to confirm the current rateable value and government rent from the latest demand note. This will give you the recurring annual cost. If you are renting, check your tenancy agreement to see who pays rates and government rent — do not assume the landlord pays both.

To verify the current rateable value of any property, use the RVD's online enquiry service (e-RV). For the latest rates percentage and any concessions, visit the RVD website at www.rvd.gov.hk. The figures in this guide are for the 2026-27 financial year and were verified against the RVD on 11 September 2026. Rates and government rent rules can change, so always confirm the current rates with the RVD before making financial commitments.