Politics
Causeway Bay Rent Bill Caps Annual Increases for Commercial Tenants
The legislation limits annual rent rises for qualifying leases in Causeway Bay, directly affecting small retailers and service operators along streets such as Russell Street and Percival Street.
How we reported this
The Rent Stabilisation Amendment Bill cleared the legislature last week and takes effect on 1 September. It caps yearly rent increases at the rate of inflation plus two percentage points for commercial properties under 5,000 square feet that have been occupied by the same tenant for at least three years. Large property portfolios and new leases fall outside the cap.
Why the change arrives now
Commercial vacancy rates in Causeway Bay reached 9.4 percent in the first quarter of 2026, according to the Rating and Valuation Department’s latest report. The bill responds to repeated submissions from district councillors who documented cases of independent shops closing after rent renewals that exceeded 15 percent. The measure applies only to existing tenancies, leaving fresh contracts and premises above the size threshold untouched.
Shop owners who qualify gain predictability in their operating costs. A newsstand operator on Lockhart Road, for example, will see the next scheduled increase limited to roughly the inflation figure plus two points instead of a negotiated jump. Service businesses such as dry cleaners and optical shops on the same stretch receive the same protection. Landlords of smaller buildings lose the ability to reset rents to current market levels when long-term tenants renew.
The legislation states that disputes over eligibility will be handled by the Lands Tribunal, with decisions expected within 60 days of filing. Property management firms handling multiple Causeway Bay addresses have begun reviewing their portfolios to identify which tenancies meet the three-year occupancy test.
Next steps for residents and businesses
The government says the policy will be reviewed after 18 months, with data on lease renewals collected through the Rating and Valuation Department. Tenants who believe their lease qualifies must submit proof of occupancy length to their landlord by 15 August. Those who miss the deadline retain the right to challenge later increases at the tribunal. District offices have scheduled two information sessions in July for business owners seeking clarification on the new rules.