Date
23 May 2017
The proposed change to the law would be unfair to operators of licensed guest houses who have invested large sums to comply with existing regulations. Photo: HKEJ
The proposed change to the law would be unfair to operators of licensed guest houses who have invested large sums to comply with existing regulations. Photo: HKEJ

Proposed law change could choke guest house industry

It all started when a guest house in North Point caught fire in 2013, injuring tourists staying there.

Since then, the Hong Kong government has been determined to tighten up the regulation of guest houses and hostels.

However, industry players complained that once the tighter regulations become law, they will make the life of operators of licensed guest houses much tougher.

In March, the government suggested amending the Hotel and Guesthouse Accommodation Ordinance to require the owners of a building to state clearly in the deed of mutual covenant (DMC) whether they will allow tenants to operate guest houses and carry out other commercial activities.

If the rule is passed, unless the building’s DMC permits them, guest houses, licensed or not, will be required to move out.

The Hong Kong Guesthouse Association (HKGA) predicts that about 500 hostels and guest houses, or 12 percent of the total, will be forced to shut down because of the amendment.

HKGA founder Leung Tai-wai told the Hong Kong Economic Journal that the root of the safety problems lies in unlicensed guest houses, so it would be unfair if the new regulation affected licensed ones as well.

Licensed guest houses have obtained approval from the government, he said.

“They conform to the Fire Services Ordinance, so how come they are still subject to the risk of being forced to close down?” Leung said.

He suggested that existing licensed operators should be exempted from the proposed rule.

The owner of a licensed guesthouse in Tsim Sha Tsui, surnamed Tsui, said she is worried about the potential amendment.

“I am confused,” Tsui said.

She bought the property for HK$5 million (US$645,000) and turned it into a guest house three years ago.

To comply with Fire Services requirements, she invested a further HK$1.2 million in renovations.

It is clear that many DMCs do not favor the operation of hostels.

Most building owners oppose having guest houses on the premises, as this could potentially lower the value of their property.

The DMC is a private contractual agreement among the owners of a building.

The government, therefore, has no power to interpret the terms or how they should be executed, Chung Wing-kwong, a senior division officer at the Home Affairs Department’s Office of the Licensing Authority, has said.

By amending the law, the government is intentionally passing the hot potato to building owners, which is quite irresponsible.

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BT/FL

EJ Insight writer

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