Your questions answered before you ask!
Q. Is there a maximum that the landlord can increase the rent.
According to Macau Law, the rental amount paid by a tenant is in agreement with both parties.
Macau law states that a rent increase must be ‘reasonable’. By definition this means that as long as both parties agree to it, it is deemed reasonable.
There have been calls from residents to try to ‘cap’ rent increases. However, it is likely that interference in the market would have a reverse effect as we have seen many times in the past.
For example, if rent increases were capped at 15%, many owners would not rent properties. As supply falls and demand grows, this would push rental prices even higher in the mid and long term. Q. Why do I have to pay 4 months money in advance.
A. Q. In most cases, tenants are asked to pay up to 4 months rental money in advance. This consists of;
• 2 months Security Deposit (See next question)
• 1 Month advanced rent
• 1 Month agency fee
When you find a property that you like, you will usually be asked to put down a deposit equivalent to 1 month’s rent to hold the property. This will then be used as the first months rent once you have moved in.
The 2 months security deposit is usually paid upon signing the rental agreement, and is explained in the next question.
The 1 month agency fee is usually invoiced prior to moving in, and becomes payable after the move in date. Q. What Is The Security Deposit For.
A. Q. The security deposit is held by the property management company or the landlord as a sum to compensate any damages to the property by a tenant.
Contrary to popular belief, the deposit may not be used in lieu of rent, unless otherwise agreed by tenant and landlord, and is held separately from the rent.
When you leave an apartment, it is normal for the property management company or landlord to conduct an inspection with you, and to reach an agreement on pricing for any damages or loss caused during the period of tenancy. Then the outstanding utility bills are worked out, and the apartment must be thoroughly cleaned.
The agreed amounts are deducted from the deposit, and the deposit returned.
This process usually takes between 2 to 10 working days. If you want your landlord to return the security deposit on the day that you move out, it is likely that you will have to make special arrangements with the landlord so that they can pre-inspect the property, and you can arrange to pay cash for the utility bills and cleaning expenses. Q. Can The Owner Sell The Apartment Whilst I Have A Tenancy Contract.
A. Q. Yes. The owner has the right to sell at any time he or she chooses. Q. If the owner sells the apartment, do we have to move out.
Tenants are protected by the tenancy contract, and a new owner does not have the right to ignore a valid tenancy contract.
The contract and all of its terms must be adhered to by the new owner, who should be aware of the tenancy agreement and have a copy provided to them during the sales process. Q. Can the owner or their agent bring people into the apartment to look around.
When you have a valid tenancy agreement in place, you may decide who and who not to let into your home.
If an agent knocks on your door and requests to see the property, you are perfectly within your rights to say “No”, then call the owner to complain. Q. How much can be charged for a security deposit?
A. Q. Ultimately, the security deposit can be agreed between the tenant and the owner.
In general Macau owners require an amount equivalent to 2 months rent as a security deposit.
Occasionally, and landlord may agree to 1 months deposit, but this is under special circumstances such as the tenant paying for the whole term of the agreement in advance, or the property being completely unfurnished. Q. Am I dealing with an experienced Landlord?
A. Q. This is a very popular question when tenants move into a new property.
As a tenant, you are in a better position when dealing with an experienced landlord or a property management company.
First time owners or owners who are renting a family property tend not to have rental systems in place to collect rents, make repairs and handle emergency issues. Q. Does a landlord have to pay interest on a security deposit?
A. Q. In some countries, owners or their representatives are duty bound to place the security deposit in a bank account, and pay the accrued interest to the tenant.
However, no such requirement exists in Macau.
With interest rates at an all time low, the most important factor when it comes to the security deposit is the safekeeping of the deposit. Q. Is the Landlord willing to be flexible with lease terms?
A. Q. The lease terms can be agreed between the landlord and the tenant through the property agency.
Contrary to popular belief, there is no minimum rental term in Macau, so its possible to negotiate almost any term up to a maximum of 30 years.
A landlord’s flexibility will depend on their personal circumstances and the property in question.
The most popular agreements are 1 and 2 year agreements. Q. Is a tenant responsible for damages to the residential premises?
Under Macau law, any items damaged by a tenant must be returned to their original condition or replaced prior to leaving the property and receiving back the security deposit.
For example, should a tenant decide to hang pictures on a wall, he or she is duty bound to return the wall to its original condition before the security deposit is released. Q. What can a landlord do if a tenant has not repaired damages?
A. Q. When a tenant has not repaired damages, the landlord is entitled to take legal action and withhold the return of the security deposit until the outcome of that action.
Usually, when a tenant ‘checks out’ of a property, the inventory is reviewed and any discrepancy noted along with damaged items. Q. Must a landlord provide a receipt for a security deposit?
A. Q. The law does not require an owner to provide a receipt for the security deposit.
It is a good idea to record the security deposit on the tenancy agreement or a separate piece of paper that can be signed and witnessed to avoid any disputes in the future. Q. Can a tenant withhold rent because a landlord is not maintaining the premises?
A. Q. Unless there is a problem with the premises that makes it uninhabitable, such as a flood, unstable walls or floors, or open electrical wires, the tenant may not withhold rent.
Rents that are more than 8 days overdue are subject to a penalty of 50% under Macau Law, and if they remain unpaid for more than 30 days they are subject to a 100% penalty.
In order to maintain a good relationship with the owner and landlord, we suggest that tenants first inform the landlord that there is a problem that requires fixing. Q. Does the Landlord have the cash to fund improvements?
A. Q. This is a question best asked upfront, before the lease is signed.
Once the answer is established, either in a positive or a negative way, you then have the information you require to make a decision on renting or not.
The landlord is not duty bound to improve a property, just to ensure that the property remains safe. Q. Can a termination notice be verbal?
A termination notice can be verbal provided both parties agree on the terms.
However, it is thoroughly recommended that tenants provide a written termination notice that clearly defines the dates concerned, and refers to the terms in the tenancy agreement.
This will help to avoid disputes, and a potential situation where a landlord can claim that they have not received any notice of termination. Q. Can a landlord charge a fee for late payment of rent?
According to Macau Law, when a rent is late by more than 8 days, the landlord is entitled to add a late payment penalty equivalent to 50% of the rental amount.
Should a rent remain outstanding for more than 30 days, the late penalty may be increased up to 100%. Q. Can a landlord increase rent anytime?
A. Q. Only if the tenancy agreement allows them to do so.
Under normal circumstances, the landlord can only increase the rent within the terms and conditions of the tenancy agreement.
If the agreement stipulates the rent and the term of the tenancy, but does not specifically state that the rent can be reviewed during the term of the agreement, then the rent cannot be increased. Q. Will the Landlord pay my agent?
In each transaction, there is usually an agent representing the tenant and an agent representing the landlord.
The agent has the responsibility to look after their individual client’s best interests.
You are paying your agent, and the agent should therefore represent your best interests.
The owner should pay their own agent, and in turn their agent should represent the best interests of the owner. Q. Do I expect the Landlord to be around for the long-term?
A. Q. This is a difficult question to answer.
Few owners will divulge their true intentions when it comes to property.
You can ask for a brief outline of the owner such as their background, their location and their history, and see what you can deduce from that. Q. Does the Landlord maintain a property inside and out?
A. Q. It is the responsibility of the landlord to keep the property in a safe condition, and the responsibility of the tenant to keep the property in the condition in which it is handed over.
Many Macau owners will only provide a turnkey tenancy. In other words, once the key is handed over, the apartment is the entire responsibility of the tenant.
On the other hand, tenants often feel that it is the responsibility of the landlord to fix every issue in an apartment, even a consumable issue such as a light bulb.
In reality and in the absence of any special clauses in the tenancy agreement, the owner is responsible for ensuring that the property is SAFE to inhabit, whilst the tenant is responsible for keeping it in the condition in which it was handed over. Q. Its so expensive, how can I afford to buy a property here.
A. Q. This question comes up a lot from ‘would-be’ first time buyers.
The first thing to understand is of course that the bank will loan you a lot of the money that is required to buy a property.
If you are a Macau resident, it is likely you will get up to 70% of the property price funded by the bank. That still leaves 30% of the price to come up with though, and even on an apartment costing $4.0m, you will have to find $1.2m in cash for the initial deposit.
There are lots of ways that you can get your families and friends to help you out with the purchase. For example, it’s possible for more than one person to co-sign for a property, so you could consider buying somewhere with a partner. Q. What should I expect to find in a furnished / unfurnished apartment.
A. Q. In a nutshell; Unfurnished generally means that there are no pieces of furniture such as chairs or TV. No surprise there.
However, you would usually expect to find ‘white goods still in the apartment such as fridge, freezer, washing machine etc.
In addition, you could also expect to see air-conditioning units, and basic kitchen appliances such as an oven and / or a cook top.
In a furnished apartment, you would expect to find Chairs, Tables, TV’s, Sofa, etc, but may not have such things as cutlery or plates.
In a ‘fully furnished’ apartment, the general idea is that you can walk into the apartment with a suitcase, and unpack and live there. So the apartment would have cutlery, bed linen, towels etc. Q. What costs are involved when I buy a property.
A. Q. First you have the price of the property of course. But there are other fees that you should be aware of.
‘Stamp Duty’ (see full explanation later) is a tax paid to the government on the price paid for the property. It is 1% on the first $2m, 2% for the next $2m, and 3% on everything over $4m.
Agency Fees are normally 1% of the purchase price, and are paid by both buyer and seller.
Legal fees and registration fees vary, but in general you can allow 5% of the price of the property to cover all related fees (including stamp duty and legal fees), and you wont be far away. Q. When should I get my 2 months Security Deposit back.
A. Q. Security Deposits are usually returnable within 2 weeks according to most tenancy agreements.
The security deposit should be returned in full unless both parties agree to make deductions from the deposits.
We usually manage to pass back security deposits within 24 - 48 of a tenant checking out of a property, and its sometimes possible to arrange a refund of the deposit upon the checkout itself. Q. Where should I buy in Macau.
A. Q. Whether you are buying a home or an investment property, its tough to go wrong in Taipa. Its close the Cotai Strip, gives easy access to the Taipa ferry terminal, and you can be in Macau in minutes if required.
If you want value for money, you will find prices in Macau a little
lower, and this may be an option if your job is on the peninsula as well.
Coloane, usually Hellene Gardens, is great if you crave a more ‘rural’ existence, and prefer easy access to trails and beaches as opposed to the hustle and bustle of the built up areas. It also offers great value for money as a place to live. Q. What is ‘Stamp Duty’ in Macau.
A. Q. Stamp duty is the government tax levied on buyers of properties, and is usually paid by the buyer, not the seller.
The amount of stamp duty is calculated incrementally on three different levels.
• Up to $2m, it is 1%
• From $2m to $4m it is 2%
• Above $4m it is 3%
A property acquired for $2.5m would incur a stamp duty of $30,000 ($2m x 1% = $20,000) + ($500 x 2% = $10,000)
A property acquired for $5m would incur a stamp duty of $90,000 ($2m x 1% = $20,000) + ($2m x 2% = $40,000) + ($1m x 3% = $30,000).
A government initiative to try to curb property speculation was introduced in April 2011. Properties sold within 1 year of the original purchase will pay an additional stamp duty of 20%, and properties sold within 2 years will pay an additional 10%.
It is also worth remembering that Macau Properties are priced in HK$, but the stamp duty is calculated in Patacas. Hence, stamp duty on a property that sells for HK$4m will be calculated on MOP4,120,000 Q. Do I need insurance if I am renting an apartment.
A. Q. Yes, to protect yourself against the loss of the contents of the property.
The owner is responsible to acquire insurance for the construction of the apartment, whilst as a tenant you are responsible for the welfare and safekeeping of the contents and furnishings.
We recommend that you have content insurance, it can be obtained from Banks in Macau, and we also have contacts for Insurance companies that we are happy to share if you are having trouble getting insurance. The amount you pay depends on the sum insured. Q. How much cash do I need to buy an apartment.
A. Q. There are a few factors here, such as whether you are a Macau resident / non-resident, plus of course salary levels and your track record with the bank.
In a nutshell, the more you can borrow from the bank, the better. Generally the banks now lend up to 70% of the property price to Macau ID holders, and 50% of the price to non-residents.
If you are buying a property for $3m, as a Macau resident you will have to find 30% of the cash or $900,000 for the deposit, plus an additional 5% or $150,000 to cover fees.
As a non-resident, you will have to find 50% of the price or $1.5m for the deposit, and again approx. 5% or $150,000 for the fees. Q. What’s the best time to find a rental apartment.
A. Q. The turnover of apartments in Macau is extremely fast. As supply is low and demand is high, there is a constant battle to find and confirm a suitable apartment in which to live before someone else takes it.
Whilst planning ahead is important, the best time to find an apartment is a maximum of 4 weeks ahead of your scheduled move date, although 2 weeks ahead is a more usual scenario.
Owners will generally refuse to hold a property for more than 4 weeks unless there is compensation for the amount of rental income being lost whilst a apartment stands empty. Q. How much will it cost to find an apartment to purchase.
A. Q. Whilst prices vary, bank charges, stamp duties and agency fees when buying an apartment are all ‘known’ amounts, and can be calculated as follows
• Stamp duty is calculated according to the formula outlined in Question 20
• Agency fees are normally 1% of the purchase price
• Most importantly, you will need a deposit of 30% or more of the purchase price, which of course can add up to several hundred thousand of dollars.
We usually estimate the fees of 5% in total when purchasing a property.
However, if you are renting a property, expect to pay an agency fee equal to 1 month of the rental amount of that property. Q. I’m only here for 3 months, can I rent an apartment.
There is usually great difficulty attached to renting an apartment for less than 6 months. Most owners consider it too much trouble, and many agents refuse to handle such short leases.
However, it is possible to rent for shorter periods using a Corporate Rental program.
Under the program, the rental agreement is signed under the company name, and the agreement provides the tenant with more flexibility than a traditional long-term lease.
Please contact us at JML Property for more details on corporate term rental programs. Q. Where can I find a good home decoration company.
A. Q. There are many good interior designers in Macau. The secret of course is finding someone that shares a similar taste to your own.
Some of the more popular furniture stores in Macau such as ‘Area’ in Ocean Gardens, Taipa and WH Furniture in old Taipa and Macau also offer design services.
At JML we handle renovations on investment property for clients, but do not take on home furnishing projects.
We usually recommend Kelly Sou of WH Furniture, who has handled projects for many local and foreign buyers over the years. Kelly has a good reputation and excellent language skills, which makes it very easy to communicate with her. Q. What happens if I don't pay the rent.
A. Q. Not paying rent is a bad idea in Macau.
Once a rent is overdue for 9 days or more, the landlord is entitled to charge a late fee premium of 50% of the rental amount.
If a rent remains overdue for 30 days or more, the landlord can now charge a late fee premium of 100% of the rental amount. In other words, once a rent is 30 days late, you would now owe DOUBLE the normal rental amount.
This is why it is so important to pay rent at the end of a tenancy agreement. The 2-month security deposit cannot be used in lieu of rent, and if you don't pay rent for the last 2 months, the debt owed will be equal to 4 months rent. Q. What’s the difference between gross and net area.
A. Q. The NET area is the area inside the walls of the apartment that can be used by the occupants.
The GROSS area is the net area PLUS a proportional amount of the common areas of the building such as the lobby, lift space and recreational club.
The net area in modern buildings with recreation facilities is usually around 70% of the gross area. This is sometimes referred to as the ‘efficiency’ or the ‘ratio’ of the building. Q. What happens when the leasehold runs out on my property.
A. Q. The leasehold property in Macau is under Portuguese law, and the leasehold is until 2049 (2 years after Hong Kong).
Leases ending earlier than 2049 are renewed on a 10-year basis, and will continue to do so until 2049.
At that point, the government will announce new lease terms and of course the price of the lease.
The leasing of land is usually a government’s main sources of income, but it is also a measure of their credibility. A government that tried to rebuke land ownership rights and property titles would effectively destroy any confidence in the country, and is therefore extremely unlikely.
It is more likely that the government will, at that time, issue new leases that expire in 2099, by which time I will be approximately 130 years old and less able to move if I have to…… Q. How much notice do I have to give on my rental apartment.
A. Q. As a tenant, you have a few choices.
When the tenancy agreement is coming to an end, you can let the owner know you will not extend at any point leading up to the end of the lease.
If it is prior to the end of the agreement, you can give notice in accordance with the contract. For example, it may say that the agreement can be terminated with 2 months notice.
If the agreement does not have a termination clause, you can give the owner 3 months notice.
When a lease is broken, the owner has the right to retain part or all of the security deposit dependent on the notice period and the wording in the tenancy agreement. Q. Who is responsible for looking after my rental apartment.
A. Q. The tenant is responsible for the safekeeping and care of the contents of the apartment, and returning the apartment in the same condition that it was handed over with an allowance for reasonable wear and tear.
The owner is responsible for the infrastructure of the apartment such as the shell of the apartment itself, the plumbing, the provision of power etc. In other words, providing reasonable and safe conditions for habitation. Q. I’m with my family, where’s the best place to live.
A. Q. With a family, the best place to live is in a complex that provides a club facility.
As Macau suffers from a lack of space, the absence of a garden or recreational areas make a club facility extremely important.
Complexes such as Nova City or Ocean Gardens have large club areas, whilst buildings such as The Manhattan and The Buckingham also have club facilities such as a swimming pool and Gym. Q. I’m alone, where’s the best place to live.
A. Q. If you have access to recreation facilities through your work, or have joined a recreation club such as The Westin, then an older block in Taipa is probably the best place to be for a single person.
You have convenient access to stores and restaurants, you are central to Macau, Cotai or Coloane, and there is a bigger choice of accommodation than you might find in Macau. Q. Is it a good time to buy property in Macau.
A. Q. If you are buying with the long term in mind, it’s still a good time to buy in Macau.
As more new Casinos and resorts take shape on Cotai, the demand for housing will increase as the population grows. Property of a ‘livable’ quality is in short supply, and basic economics tell us that prices will continue to rise.
However, rising prices cannot continue indefinitely, and there are bound to be ups and downs along the way. But we have to live somewhere, and it makes good financial sense to own the property we live in.
Apart from anything else, we are at least in control of our living arrangements, and not looking for a new place to live every 2 years. Q. Can my landlord throw me out of my apartment.
A. Q. Yes, but only under certain circumstances. These include;
If a tenant does not rent at the appropriate time;
If a tenant uses the property for illegal purposes;
If all or part of the property is sub-leased without the express permission of the landlord;
If the usage of the property is different from the original purpose, for example if the apartment is used as an office or workshop space;
If alteration work on the apartment is carried out without the express permission of the landlord. Q. What the best way to get a cheap property.
A. Q. As a tenant, the cheapest option for property is to remain in the property that you are in, paying rent on time and negotiating with the owner for the longest possible rental term.
You will find that many agencies charge lease renewal fees nowadays, and these vary from agency to agency. Especially when rents are rising, paying a renewal fee is far cheaper than arranging a new lease. However, do make sure you know what the fees are before you agree the renewal.
As a buyer, the best way to get a property at a knock down price is to be ready to place a substantial deposit on a property instantly. In such a dynamic market, properties move faster than we can blink. Q. Can I use the security deposit to pay the last 2 months rent.
Deposits may not be used to cover rents. A deposit is for the fixtures, fittings and furnishings of the property. Macau Law is very specific about this. The moment that a rent is unpaid for 30 days, the landlord is entitled to the amount of rent owed plus an additional penalty equal to 100% of the rent. In other words, if you don't pay rent for the last 2 months, you will owe 4 months rent. Q. What’s going to happen to property prices in Macau.
A. Q. As we are all very much aware, Macau is extremely small. Even with the addition of Hengqin Island, land and space are extremely limited. There is only one way to build; Up.
Macau’s economic future looks as certain as anything can be, at least until 2049. Over the long term, it is difficult to see anything other than a rise in property prices.
Every increase is met with similar attitudes from prospective buyers; It can’t continue to rise, there is a limit of ‘x’ beyond which it will never go etc. Yet prices have continued to rise, and property that looked expensive last year now looks like a bargain. We can see many arguments for continued growth, whilst a slowdown would almost certainly be the result of something happening outside of Macau. As such it is difficult to draw a conclusion other than this; Provided you have a long term view of 5 years or more, Macau property prices are likely to rise in that time.