Even as 2015 was winding down and coming to an end, the
government of the Macau Special Administrative Region was busy
putting together a robust draft law to amend various aspects of
the legal framework for lease agreements. At present, the rules
set out in the Macau Civil Code (1999) govern lease
A decade and a half after Macau's legislative assembly
approved these rules, the reality in which they were grounded
has changed dramatically. This is a common theme driving the
need for legislative reform in Macau.
As the draft law was going through the legislative phase,
the government cited three socio-economic issues behind the
need to draft amendments to the legal framework for leases.
First, the government recognised the need to ensure fair rents
and to create a way to control increases in rent. Second, it
wanted to address the phenomenon of so-called rogue tenants
which poses a challenge to market development. Third, the
government noted the lack of control in the execution of lease
agreements which gives rise to many irregularities and problems
relating to housing.
Several mechanisms have been developed to resolve these
issues. Among these mechanisms, is the rent control
coefficient. This will be determined by the region's chief
executive based on the consumer price index and the situation
in the real estate market. A new lease arbitration centre will
also be created to provide an alternative means of dispute
resolution. In addition, there will be a stricter requirement
on the legal form of lease so that the signatures must now be
The draft law advances the policy of diversifying the
region's economy. For example, prohibiting the lessor from
unilaterally terminating the lease in the first three years, if
the property is dedicated for commercial use or for the
exercise of liberal professions, is intended to increase the
stability of the lease relationship upon which the businesses
operated by those tenants rely.
Altogether these measures are intended to help develop the
region. The specific terms of the draft law will likely be
approved in the legislative assembly's next vote. It will come
into force once it has been signed by the chief executive.
Domestic and foreign investors should be aware of these
imminent changes that are highly relevant when entering into
lease agreements, contemplating speedy dispute resolution, and
assessing the profitability of Macau's leasing industry.
Pedro Cortés and Calvin Chui