HONG KONG — The Hong Kong Government has launched the Basic Housing Units (BHU) Ordinance on Sunday, marking a major step to regulate substandard subdivided units (SDUs) and improve living conditions for 220,000 residents across Hong Kong. While aimed at ensuring safer homes, critics fear the rules could displace the city’s poorest tenants through evictions and rent hikes.
A four‑year roadmap to clean up subdivided flats
Under the new law, owners of SDUs must register their properties with the Housing Bureau and ensure they meet government standards – including a minimum size of 86 sq ft (eight square metres), ceiling height of 2.3 metres, at least one window and one toilet per unit – before they can be licensed as basic housing units and rented out legally.
The Government has adopted a “registration first, enforcement later” approach, opening a 12‑month registration window for existing SDUs, followed by a 36-month grace period for owners to carry out any necessary alteration works. This creates a four‑year transition period that runs until February 28, 2030.
To encourage early registration, the Government is providing “early-bird” incentives, with applicants who apply within the first six months eligible for a full waiver of application fees during the first three years of the BHU rollout. Owners who fail to register under the new system and continue renting out their units will face prosecution from March 1, 2027, with a maximum fine of HK$300,000 (US$38,300) and up to three years in prison.
Housing Secretary Winnie Ho welcomed the new legislation and noted that about 30 percent of the city’s 110,000 subdivided flats will need upgrading, with owners given four years to comply. She added that not all units will be renovated at the same time, so demand for transitional housing should remain manageable.
“Nearly 30,000 subdivided flats do not meet the bill’s minimum floor area requirement of 8 square metres,” she said.
To ease the transition, the Housing Bureau says it will adopt a “pragmatic, people-oriented and risk-based” enforcement strategy to avoid mass displacement of tenants. Its Dedicated Team on Subdivided Units will coordinate with six District Service Teams to help affected households secure alternative accommodation, while NGOs including the Lok Sin Tong Benevolent Society are also being deployed to support resettlement efforts.
Pressure mounts on landlords
Despite the significant compliance costs under the new ordinance – which could go as high as HK$50,000 in certification fees for a flat divided into four units – Ms Ho dismissed concerns that these expenses will drive up rents, insisting BHU prices will remain stable as the government will provide sufficient public housing for those in need.
However, Joseph Wong, a landlord operating more than 20 SDUs in Mong Kok, isn’t entirely convinced. After crunching the numbers, he said he could end up spending millions in total to comply with the new law and expects to raise rents for compliant units over time to recoup costs for renovations. “I will have to work with all these professionals on the design and planning. It could cost at least HK$90,000 to inspect a whole flat, install plumbing, electric meters and other safety features … and don’t get me started on certificate renewals every five years,” said Wong, admitting that it could take over a year to break even.
Wong also sees opportunity in the shake-up. With substandard units being phased out and supply expected to fall by roughly 30 percent, he believes the new law could yield greater returns in the long term. He pointed to growing demand from mainland Chinese students and professionals who prefer renting to buying, and said that while lower-income tenants may struggle to absorb higher costs, the increasingly competitive market makes him believe “there will be tenants out there willing to accept rent hikes of 10 to 15 percent.”
Tenants left in the lurch
Some Hong Kong residents have expressed concern about the ordinance. Households on Yee Kuk Street in Sham Shui Po warned that even modest rent hikes after costly renovations could prove unaffordable, especially if landlords choose to reclaim flats, consolidate units or shift into more lucrative leasing models.
“The landlords will no doubt exploit us. I’m already paying HK$3,500 each month for a 60-square-foot space that just fits my tight budget,” said Ms Kwok, a Sham Shui Po resident.
As SDUs are upgraded or taken off the market, tenants are now facing a surge in forced evictions. More than 100 households at Yee Wa Building in Sham Shui Po were forced to relocate last month after landlords moved to upgrade flats, with most available transitional housing limited to distant sites in Tai Po and Yuen Long.
Kwok, who lives nearby and has close friends at Yee Wa Building, believes the government should ramp up the supply of alternative accommodation and urged the authorities to subsidise rents to ease the transition for uprooted tenants. According to the Housing Bureau, only 220 transitional housing units are slated for completion in the first half of this year.
“Give us more options and locations to choose from. I remember Kai Tak has all those community container homes which were built during Covid. Why not use them? Expand those facilities and make it affordable for us,” she said.
The rise in tenant evictions is also nudging residents toward cheaper and unregulated industrial units in the black market. Since SDUs in industrial buildings are illegal under the Buildings Ordinance, they fall outside the new BHU regime. This has become a selling point for tenants to flee regulated residential SDUs to cheaper setups.
Ms Chan is a prime example. A single mother of two, she lives in a 80-square-foot subdivided flat on Bute Street in Mong Kok. When asked about her situation, Chan said, “It’s already tough making ends meet. If the rent goes up we’ll have no choice but to consider moving into cage houses or factory buildings. It’ll force us out. I don’t want that for us, but what else can we do?”
Chan added that the Yee Wa Building case is just the tip of the iceberg and evictions will become more widespread, pushing the city’s poorest into the shadows of an already fractured housing market.
She called for tougher rent controls to protect tenants from being priced out. Part IVA of the Landlord and Tenant (Consolidation) Ordinance covers nearly all subdivided flats in the city and currently caps rent increases at 10 percent per two-year lease period, with no hikes allowed in the first two years. However, it imposes no limits on the initial rent charged to tenants. Many landlords have also failed to submit the required tenancy notices – with only 52,700 forms filed as of April 2025 – leaving renters vulnerable to exploitative practices.
“Evictions are just getting started, and many families have nowhere to go,” Chan said. “The government needs to wake up. Lower the rent hike cap, crack down on landlords dodging the regulations, and protect us from their dirty tricks before it’s too late.”