A furnished flat, a good location and a stream of visitors who will pay a nightly rate well above a monthly rent: it is an easy idea to have, and an easy one to get wrong. In Hong Kong, letting a residential flat on a short-term basis is regulated by criminal law, not just by the terms of a lease. Owners, tenants and buyers all meet the rule from different directions, and it is worth understanding before any money changes hands.
The 28-Day Line
The relevant statute is the Hotel and Guesthouse Accommodation Ordinance (Cap. 349). Under it, premises that operate as a hotel, guesthouse or holiday flat need a licence unless an exemption applies. The exemption that matters for flat owners is a time-based one: accommodation provided for 28 continuous days or more for each letting falls outside the licensing requirement, provided rent is paid.
The practical reading is that the length of each individual letting is what counts. A flat let on a conventional one-year or six-month tenancy sits comfortably on the safe side. A flat let night by night, or for a week or a fortnight at a time, does not. Offering a 28-day stay does not create a problem, but offering a 27-day stay can.
What the Penalties Are
The penalties were raised by the Hotel and Guesthouse Accommodation (Amendment) Ordinance 2020. The maximum fine for operating without a licence rose from HK$200,000 to HK$500,000, and the maximum prison term from two years to three. The 2020 changes went further than the headline figures:
- Unlicensed operation became a strict liability offence.
- The licensing authority gained the power to seek search warrants that allow forced entry.
- The authority can register a written notice about unlicensed premises at the Land Registry.
- A court can order premises closed for six months after a second conviction within 16 months.
Advertising also carries weight. Official guidance warns that a public advertisement offering short-term lets can be admissible evidence in a prosecution, even where no letting ever took place. Putting a listing online is therefore not a harmless test of the market.
A Licence Is Not the Whole Answer
Even an owner willing to apply for a licence has more to clear than the ordinance itself. Official guidance tells owners to check that the use is allowed under the Government Lease, the Outline Zoning Plan and the building, fire and drainage rules. Since the 2020 amendments, the licensing authority also considers restrictive provisions in land documents and the views of affected persons, and asks whether the applicant is a fit and proper person.
In a multi-owner building, that means reading the Deed of Mutual Covenant. Many residential developments restrict use to private residence, and a management committee or owners’ corporation may take a keen interest in a flat that sees a different guest every weekend. The licensing question and the title question are separate, and clearing one does not clear the other.
If You Are a Tenant
A tenant who lets a flat out nightly is in a different position from an owner, but not a safer one. The tenancy agreement almost always restricts subletting and assignment, and short stays for payment are likely to breach it. A tenant who is tempted to offset the rent this way risks losing the tenancy and facing prosecution at the same time.
The reverse also matters. A tenant who signs for what turns out to be an unlicensed short-stay operation, or a tenant of a flat whose landlord is later prosecuted, can be caught up in a closure. Asking at the outset how the landlord intends to use the flat, and what the lease says, is a reasonable and ordinary question.
If You Are Buying
The Land Registry notice power makes this a title issue for buyers. If a written notice about unlicensed premises has been registered against a flat, it should appear on a land search, and a solicitor will see it. That is a good reason to treat the search as more than a formality.
Beyond the search, a buyer can ask whether the flat has been used for short stays, check the Deed of Mutual Covenant for use restrictions, and be wary of any sale that is priced on the strength of nightly-rate income. A projected return built on an activity the law restricts is not a return a lender or a careful buyer should rely on.
The Bedspace Rule
A related ordinance, the Bedspace Apartments Ordinance (Cap. 447), applies where a flat has 12 or more bedspaces occupied, or intended to be occupied, under rental agreements. It is aimed at crowded shared accommodation rather than visitors, but it shows the same principle at work: how a flat is divided and let, not what it is called, determines whether a licence is needed.
A Note on Figures
This guide deliberately uses no market price or rental data, because the rules described here do not change with the market. The only figures are statutory ones: the 28-day threshold, the HK$500,000 and three-year maximum penalties, and the 12-bedspace trigger. Those reflect public guidance as understood at the time of writing; the legislation is amended from time to time, so check the current text before relying on any of it.
Takeaway
Before a flat is offered for anything shorter than 28 continuous days per letting, three questions need clear answers: is a licence required, do the Government Lease and Deed of Mutual Covenant allow the use, and who bears the risk if either answer is no? For most owners and tenants, a conventional tenancy remains the lawful default. This is general information, not legal advice, and a solicitor should be consulted on a specific property.