Hong Kong

Navigating the end of "no-fault" evictions, strict compliance deadlines, and the shifting tax landscape for overseas property investors The UK property market has long been a favoured destination for Hong Kong investors. Over the past few years, the number of Hong Kong residents letting out property in Britain has surged, with recent data suggesting they now make up approximately 10% of all UK landlords. Drawn by the prospect of steady rental yields, a weaker pound, and the desire to secure homes for children studying at UK universities, Hong Kong buyers have built an estimated £10.8 billion portfolio across England and Wales. However, a seismic shift has just occurred in the UK rental landscape, and overseas landlords need to pay close attention. On 1 May 2026, the Renters’ Rights Act 2025 (RRA) officially came into force, introducing the most substantial changes to the private rented sector since the 1980s. For Hong Kong residents managing UK properties from over 6,000 miles away, these new regulations introduce a layer of complexity that demands immediate action and careful navigation, particularly when coupled with incoming tax digitisation rules. The end of "no-fault" evictions and the rise of assured periodic tenancies Perhaps the most headline-grabbing change brought about by the RRA is the abolition of Section 21 "no-fault" evictions. Previously, landlords could ask tenants to leave with two months' notice without providing a reason, provided the fixed term of the tenancy had ended. This provided a safety net for overseas investors who might suddenly need to sell the property or move family members in. Now, all new and existing Assured Shorthold Tenancies (ASTs) are transitioning into Assured Periodic Tenancies (APTs). This means tenants have the right to remain in the property indefinitely, and landlords can only regain possession by proving a valid legal ground under Section 8 of the Housing Act 1988. For a Hong Kong landlord, this transition is not necessarily automatic on 1 May 2026. If the 1st of May fell in the middle of a rental period, the tenancy only converts at the beginning of the next rental period. Landlords must understand exactly when their specific tenancies convert to ensure they are operating within the correct legal framework. Mandatory information and compliance deadlines Distance and time zones already make managing UK properties challenging for Hong Kong investors. The RRA adds strict administrative deadlines to this mix. Landlords with ASTs continuing beyond 1 May 2026 were legally required to serve their tenants with a government-published information sheet detailing the changes by 31 May 2026. Failure to comply with this requirement carries a risk of financial penalties of up to £7,000, making it crucial for overseas landlords to coordinate closely with their UK letting agents to ensure all paperwork is served promptly and correctly. Furthermore, any new APTs granted on or after 1 May 2026 must include specific written information about the terms of the tenancy, as set out in regulations that also came into force on that date. While existing tenancy agreements do not need to be rewritten, ensuring all new documentation meets the updated standards is vital. Reclaiming possession: the new rules of engagement While Section 21 is gone, landlords are not left entirely without recourse if they need their property back. The RRA has expanded and strengthened the Section 8 grounds for possession. If a Hong Kong investor decides to sell their UK property, or if they (or a close family member) intend to move in, these are now mandatory grounds for possession, requiring two months' notice. However, landlords cannot simply use these grounds as a backdoor eviction method; the courts will require evidence of genuine intent. For landlords dealing with problematic tenants, the rules have also been adjusted. The mandatory ground for repeated rent arrears has been strengthened, allowing landlords to seek possession with four weeks' notice if a tenant has been at least two months in arrears on three separate occasions over a three-year period. The definition of antisocial behaviour has also been broadened, allowing for immediate notice to be served. Crucially, if a landlord served a Section 21 notice before the 1 May 2026 deadline, they cannot sit on it. They must follow up promptly and take court action to recover possession, usually before a strict cut-off date (31 July 2026), or risk losing those rights entirely and having to start again under the new Section 8 rules. Pets, rent reviews, and the road ahead The RRA also introduces significant changes to everyday tenancy management. It is now an implied clause in all assured tenancies that a tenant can request consent to keep a pet, and landlords can only refuse on reasonable grounds within a 28-day window. For an overseas landlord, evaluating these requests and communicating decisions within the legal timeframe requires efficient property management on the ground. Additionally, the Act impacts rent reviews. Contractual rent reviews carried out before 1 May 2026 are only binding if the increased rent also became due prior to that date. Moving forward, rent increases are limited to once per year, requiring statutory notice. Tax implications: income tax and the non-resident landlord scheme Beyond the regulatory shifts of the RRA, Hong Kong residents must also navigate the complexities of UK taxation on their rental income. Under the Non-Resident Landlord Scheme (NRLS), letting agents are required to deduct basic rate income tax (20%) from rental income before paying the overseas landlord. Landlords can apply to HMRC to receive rent gross, provided their UK tax affairs are up to date, but they remain liable to declare this income via a UK Self-Assessment tax return. The RRA's restriction on rent increases to once per year provides tenants with stability but means landlords must carefully plan their financial trajectory, especially given that mortgage interest relief is now restricted to a 20% basic rate tax credit rather than a full deduction from rental profits. Furthermore, a major compliance hurdle is approaching: Making Tax Digital (MTD) for Income Tax. From 6 April 2026, non-resident landlords with a qualifying gross income over £50,000 will be mandated to keep digital records and submit quarterly updates to HMRC using approved software. This threshold drops to £30,000 in April 2027, bringing the vast majority of Hong Kong investors into scope. Preparing for MTD is no longer optional; it requires immediate engagement with accountants to ensure software compliance. The inheritance tax trap Finally, while managing day-to-day income tax is essential, Hong Kong investors must not overlook the long-term implications of UK Inheritance Tax (IHT). Regardless of a landlord's domicile or residence status, UK property is always subject to UK IHT at a rate of 40% on the value of the estate above the £325,000 nil-rate band. As detailed in our previous insight on The Wide Net of UK Inheritance Tax, failing to plan for IHT can leave families with substantial tax liabilities. With the UK government shifting to a residence-based IHT system from April 2025, the rules surrounding overseas assets are also changing for long-term UK residents, making bespoke estate planning more critical than ever. For Hong Kong residents investing in the UK, the Renters' Rights Act 2025 fundamentally alters the balance of power in the private rented sector. The days of hands-off, easily terminated tenancies are over. Navigating this new landscape requires proactive engagement, a thorough understanding of the new statutory grounds for possession, and, more than ever, reliance on competent, legally compliant letting agents and tax advisors in the UK.   Author: Polly Chu

Oldham, Li & Nie (OLN), a leading independent law firm in Hong Kong, is pleased to announce that Valerio Scimemi has joined the firm as a Registered Foreign Lawyer (Italy), further expanding OLN’s cross-border offering. Admitted to practice law in Italy since 2001 and before the Italian and European higher courts since 2015, Valerio brings more than 25 years of international legal experience. His practice focuses on commercial and corporate law, international contracts, M&A, extraordinary transactions, and cross-border business expansion.   Over the course of his career, Valerio has advised European and Asian clients on commercial, corporate and industrial law, labour law, banking and finance, intellectual property, and complex M&A transactions. He has particular expertise in business development and intermediation, as well as in the international expansion of businesses in the luxury fashion, oil and gas, F&B, and spirits sectors.   The addition of Valerio marks another important milestone in OLN’s strategic growth and reinforces the firm’s commitment to providing seamless international legal services. His appointment builds on the firm’s established Chinese, French and Japanese practices, as well as its U.S. tax advisory capability.   For more information about Valerio and his practice, visit: https://oln-law.com/our-people/valerio-scimemi/.   Contact: [email protected]   About Oldham, Li & Nie: Oldham, Li & Nie is a highly awarded full-service Hong Kong law firm whose commitment to professional excellence has been the cornerstone since its establishment in 1987.   The firm currently has over 45 lawyers, with specialists in corporate and commercial law, dispute resolution, employment, family, intellectual property, private client and tax law.   For more information about Oldham, Li & Nie, please visit  https://oln-law.com/.

Hong Kong Exchanges and Clearing Limited (HKEX) published in December 2025 its annual review of listed issuers’ reports for the financial year ended 2024. Together with the review, HKEX updated its Guide on Preparation of Annual Reports setting out recommended disclosure practices for future annual reports. HKEX also launched its AI-powered annual report explorer platform to assist issuers in preparing annual reports. The new platform enables the public to view disclosure made by different issuers on particular listing rules through searches by key words or rules, provides a digitalised version of the guide, and covers findings and recommendations. Disclosure rules with the lowest compliance rate Issuers continued to achieve a high rate of compliance at 99%, representing an increase of 1% compared with last year. That said, ten disclosure rules recorded lower compliance levels, with rates between 81% and 92%. Of these, five relate to share schemes: (1) vesting period of options granted under the share scheme; (2) shares available for issue under share award scheme (number and percentage) as at the date of annual report; (3) number of awards available for grant under scheme mandate and service provider sublimit (if applicable) at beginning and end of the year; (4) shares available for issue under share option scheme (number and percentage) as at the date of annual report; and (5) number of options available for grant under scheme mandate and service provider sublimit (if applicable) at beginning and end of the year. The other five relate to: (1) confirmation of newly appointed directors’ understanding on their obligations and the date of receiving relevant legal advice; (2) breakdown of actual use of proceeds brought forward from previous years; (3) whether performance guarantee was met; (4) number and percentage of shares held in significant investment; and (5) intended use of treasury shares. Management discussion and analysis Issuers’ disclosure practices have generally improved, with most newly listed issuers keeping disclosure standards largely aligned with their prospectuses. Nonetheless, further enhancements remain necessary in the following areas: Boilerplate and generic languages were still observed. Certain issuers presented financial figures without adequately identifying or discussing the key drivers behind the results. Year‑on‑year changes in performance indicators or industry‑specific metrics were insufficiently explained. Some annual reports lacked clarity on management’s assessment of market and internal factors or strategies in response. Disclosure not sufficiently coherent or integrated across different sections or with other reports. For example, some issuers, in their management discussion and analysis (MD&A), noted regulatory changes and risk factors but did not elaborate on how these developments might affect financial performance and prospects. Failure to maintain consistency year-on-year in terms of information coverage and detail. Certain issuers discontinued to disclose performance indicators without explanation, while some others did not follow up on previously disclosed matters or failed to evaluate current‑year performance against that of the prior year. Disclosure over-emphasised on positive aspects while downplaying or disregarding challenges and risks. Securities investments A number of issuers engaged in frequent or sizable securities trading and financial investments outside of their principal businesses. However, disclosures relating to such investments were often limited, relying on generic descriptions such as “significant investments” or “prudent/long‑term investment strategy” without sufficient detail. HKEX strongly encourages issuers to improve disclosures by providing the following information: Investment portfolio, including investment size and types, investment strategies, investment period, source of funding, fair value, performance and (for fund investments) underlying assets, fund strategies and identity and credentials of the fund managers; Investment policy and objectives, including scope of investments, particulars of permissible and prohibited investments, and explanation on whether and how the investment strategy aligns with the issuer’s corporate strategy and principal businesses; Risk management and control measures, such as defined risk limits, specific metrics used to measure the risk, counterparty risk, and liquidity management mechanisms; and Approval and oversight mechanisms, including the roles and authority of the board or designed personnels/ committees (e.g. investment committee) in approving, monitoring and reviewing investments. Hong Kong Financial Reporting Standard 18 The new Hong Kong Financial Reporting Standard 18 (HKFRS 18) “Presentation and Disclosure in Financial Statements” will replace the existing Hong Kong Accounting Standard (HKAS) 1 “Presentation of Financial Statements”, and take effect for annual reporting periods beginning on or after 1 January 2027. Such transformation requires retrospective application, and therefore HKEX urges issuers (particularly with a December financial year-end) to take proactive planning and actions in 2026 for ensuring a smooth transition to HKFRS 18. It is because preparing for HKFRS 18 extends beyond a purely accounting exercise. The change is expected to affect issuers’ IT systems and internal controls over financial reporting (e.g. capturing financial data from subsidiaries to support the new presentation) and business activities (e.g. loan covenants). It also provides an opportunity to refine performance communication with investors and build a better connectivity between financial statements and MD&A. Auditors’ modified opinions The review noted that 94% of issuers published financial statements accompanied by unmodified audit opinion, while 164 issuers received a modified audit opinion (i.e. qualified opinion, adverse opinion or disclaimer of opinion). Going concern uncertainty remains the most common audit modification category. Other circumstances include valuation/genuineness of investments, valuation of other assets (e.g. goodwill, plant, inventories), recoverability of loans and receivables, limited access to accounting records and provision of liabilities. Starting 2025, HKEX requires these issuers to publish quarterly progress updates on the implementation of remedial proposals. The audit committee is expected to critically consider management’s proposals and assumptions adopted, act as a bridge between management and auditors in resolving disagreement, and explain its views on the appropriateness of the issuer’s going concern basis. Rossana Chu is a partner at YYC Legal LLP [email protected]

Oldham, Li & Nie (OLN), a leading independent Hong Kong law firm, is pleased to announce the launch of a dedicated U.S. Tax Advisory Practice. This new practice expands the firm's ability to assist Hong Kong clients with U.S. federal and California tax and legal matters, as well as business and corporate issues involving U.S. interests. The practice is designed to support U.S. expatriates, multinational businesses, and investors with U.S. connections. Leading this new chapter is Joshua Maxwell, who joins OLN as a Registered Foreign Lawyer (California, USA). Joshua brings extensive experience in tax advisory work, along with a practical and client-focused approach. Mr. Maxwell said “I am excited to join OLN and lead the new U.S. Tax Advisory Practice. This initiative will integrate seamlessly with the OLN’s existing teams and enhance the value delivered to the firm’s clients with U.S. tax and business interests. Our aim is to offer expert guidance on both U.S. federal and California tax, business, and legal matters, ensuring that our clients feel confident and well-supported. I am looking forward to collaborating with the talented team at OLN and contributing to the firm's continued growth and success". This launch marks an important milestone in Oldham, Li & Nie's journey to expand its international service platform, building on its established Chinese, French, and Japanese practices. For more information about the OLN’s U.S. Tax Advisory Practice, visit: https://oln-law.com/practice-areas/us-tax-advisory-services/. Contact: [email protected] About Oldham, Li & Nie: Oldham, Li & Nie is a highly awarded full-service Hong Kong law firm whose commitment to professional excellence has been the cornerstone since its establishment in 1987. The firm currently has over 45 lawyers, with specialists in corporate and commercial law, dispute resolution, employment, family, intellectual property, private client and tax law. For more information about Oldham, Li & Nie, please visit  https://oln-law.com/.