9. The covenants, terms and conditions in the Government leases of some premises do not allow the occupiers to let for residential use (Examples: Registered or unregistered squatters, roof-top unauthorized building works, industrial buildings, container houses, or caravans on farmland). Are tenancy agreements on such premises legally binding?
Whilst a tenancy in non-compliance with the Government lease is not strictly forbidden, entering into such kind of tenancy arrangements is obviously not without risks and problems.
Many of these premises are inherently not suitable for habitation, posing dangers and threats to the safety of the occupants.
If the tenant is aware of the contravention at the time when the tenancy agreement was entered into, he cannot later use this as a ground to dispute the validity of the tenancy agreement or to refuse to pay rent to the landlord.
Breach of the user restriction of the Government lease may trigger the Government exercising its right of re-entry under the Government lease, or the statutory right of re-entry or power to vest the relevant interest under the Government Rights (Re-entry and Vesting Remedies) Ordinance (Cap. 126), in which case the landlord will cease to be the owner immediately.
The landlord and the tenant should also be aware that they are most likely in breach of the deed of mutual covenant of the building, if any, and may be liable in legal action by the management company, the incorporated owners (if any) or other owners of the building.