How can I convince Hong Kong multi-billionaire residential landlord to reduce rent?

Question

Brother Ivan rents 500 sq ft flat (46.45 sq m) in Hong Kong for $20K HKD (2580 USD)/month. Lease contract states he can't terminate until expiry in Dec 2021. Landlord is CKAH (Cheung Kong Asset Holdings). Their after-tax profits were 30 billion HKD in 2019, and 41.6 billion in 2018. Owner Li Ka-shing's net worth is $30 billion USD. We're RILED!

Pro democracy protest started in June 2019, crippled his business, and he incomes less. He requested rent reduction, but Chief Manager for Leasing refused. When COVID-19 arrived Hong Kong in Dec 2019 he again asked for a rent reduction, but Chief Manager for Leasing again refused. They didn't answer why they can't reduce.

Any ideas to convince them please?

Even if CKAH let him terminate, H.K. rental market is too hot now! Ivan can't find cheap flat.

Answer 1

I can't think of any way. 20K per month for 500 sq ft is considered cheap if the unit is located in Urban Area and directly managed by a property developer.

Furthermore, the protest situtation is the past (past rent is paid already) and the COVID-19 is virtually contained at the expense of reduced tourists. Rental Index only decreased by 10% back to Mid-2018 prices, so if the lease was signed in Mid-2019 for two years, the lease is only de facto 5% higher than current market prices.

Corporate landlord has far more rigid pricing rules than individual landlord. My advice is find another listing of nearby building, research on "Actual Rental Transactions" by browing Here and Here, then offer on the listing (Listed Asking Price is usually 7-12% higher than Actual).

Other ways that could convince an individual landlord include:

• Increasing the pre-paid rental deposit from 1 month to 3 months
• Agreeing that changes to management fee paid by landlord to be "pass-through" to the tenant
• Agreeing that the landlord is not responsible for fixing the appliance (air-conditioner, microwave)
• Agreeing to rent "back-to-back" starting from the previous lease of the landlord, ensuring no "vacant-period" or "rent-free period"
• If income is decreasing but is still high enough to cover the rent, submit proof of income and asset upon signing
• Present the historical actual rental transactions of nearby units of the same building to the landlord, as they are only aware of the overpriced listing

Answer 2

Landlords are notoriously difficult to work with. In part because a lease is a much stronger agreement than a regular contract, and landlords typically have stronger remedies (e.g. the right of levying distress - taking the tenant's property if the rent isn't paid).

Commercial landlords have policies in place to maximize profits, so they make it difficult to ask for a break. Find out what your rights and options are by having a local attorney review your lease and talk to a real estate broker about finding an alternative.

If the market rates are higher than the tenant was paying, the worst situation for the landlord would be having to evict the tenant and rent it out at the market at a higher rate to a new tenant.

You may find that you have leverage in that you still have to pay them the rent and suspending payment may force them to come back to discussions but just be very aware of the consequences. Worst case, is that you could have to pay the rent plus their legal costs and damages, and if you don't have the money, you could be made bankrupt. Given what is involved, make sure you have correct information from a professional qualified person (not stack exchange (!)) before making a decision.