[Direct Summary]
Rates are an indirect tax levied by the Hong Kong Government on properties (including residential and commercial) to fund public services. In 2026, non-residential rates are calculated at 5% of the “Rateable Value”; residential properties with a rateable value exceeding HK$550,000 are subject to a progressive system (5%-12%). For the first two quarters of the 2026/27 financial year, the concession is capped at HK$500 per quarter per unit. Legally, both landlords and tenants are liable, but in practice, it depends on the tenancy agreement. If you object to the valuation, you must submit Form R20A by May 31 annually.

Expert Practical Experience Sharing

Based on our years of real-world experience assisting commercial and retail landlords and tenants in Hong Kong, the most common disputes often stem from poorly defined “all-inclusive” leases. Many new tenants assume they do not need to pay rates during a rent-free period. However, if the contract does not explicitly state this, the Rating and Valuation Department (RVD) can still pursue the occupier for payment. We strongly recommend clearly stating in black and white which party is responsible for the rates when signing the tenancy agreement, and fully utilizing the government’s annual concessions to lower operating costs.

1. Definition of Rates: A Crucial Component of Hong Kong Property Tax

Simply put, Rates are an indirect tax levied by the Hong Kong Government on property owners and occupiers. The revenue collected is added to the government’s general revenue to fund various public services. Notably, rates are paid quarterly in advance. In Hong Kong, besides rates, some properties are also subject to Government Rent. Therefore, understanding rates is a key step in managing property holding costs.

2. Rates Calculation Method and 2026 Latest Percentages
Calculation Formula:

Rateable Value × Rates Percentage = Rates Payable
(The Rateable Value is assessed by the RVD on October 1 every year and takes effect on April 1 of the following year.)

3. Who is the Payer? Liability between Landlords and Tenants

Under Hong Kong law, both the owner and the occupier (tenant) of a property are liable for rates. However, in practice, who actually bears this cost usually depends on the terms explicitly stated in the tenancy agreement.

In the Hong Kong rental market, many landlords lease units on an “all-inclusive” basis, meaning the rent already covers rates and management fees. In this case, the landlord typically handles the payment. If the lease does not specify that the landlord pays the rates, the occupier (tenant) is legally responsible for the payment.

4. 2026 Latest Rates Concessions and Exemptions Policy

1) 2026/27 Financial Year Concession Measures

• Applicable Period: April to June, and July to September 2026 (First two quarters).
• Concession Cap: For both residential and non-residential properties, the concession is capped at HK$500 per quarter for each rateable property.

2) Rates Exemption Conditions (Common Categories)

You may apply to the RVD for exemption if your property meets the following conditions:

• Agricultural land and related buildings
• Village houses occupied by indigenous villagers of the New Territories or their immediate family members
• Properties used for public religious worship
• Properties in rebuilt villages in the New Territories

5. Payment Methods and Late Penalties

Rates must be paid quarterly in advance by the end of January, April, July, and October each year.

• Common Payment Methods: FPS (Faster Payment System), PPS, Bank Auto-pay, Online Banking, and 7-Eleven/OK Convenience Stores (Maximum limit HK$5,000).
• Late Penalties: A 5% surcharge will be added if unpaid after the due date; an additional 10% surcharge will be imposed on the outstanding amount if it remains unpaid six months after the original due date.

6. What to Do If You Object to the Rates Valuation?

• Lodge an Objection: Submit a proposal using Form R20A on or before May 31 each year.
• File an Appeal: If you are dissatisfied with the Commissioner’s decision, you can appeal to the Lands Tribunal within 28 days after the notice of decision is issued. (Note: You must continue to pay rates on time during the appeal process. Any overpayment will be adjusted in subsequent bills if the appeal is successful).

Frequently Asked Questions (FAQ)

Q1: Does a tenant need to pay rates?
By law, both the landlord and the occupier (tenant) are liable. In practice, it depends on the tenancy agreement. If not specified, the landlord usually pays; however, if the landlord defaults, the government has the right to recover the rates from the tenant.

Q2: What is the rates concession amount for 2026?
According to the 2026/27 Budget, the rates concession is capped at HK$500 per quarter for each rateable property for the first two quarters (April to September 2026).

Q3: How can I check the Rateable Value of my property?
You can log in to the official website of the Rating and Valuation Department (RVD) at any time to check the latest Valuation List, or use their “Rates and Government Rent Calculator” for an estimation.

Q4: What should I do if I haven’t received my rates demand note?
You can check via the RVD website (www.rvd.gov.hk), call 2152 0111, or request a replacement copy. Not receiving the demand note is not a valid excuse for late payment.