Legal Uses of Industrial Building Units: More About Industrial Building Deeds!

Recently, a restaurant in Kwun Tong’s industrial building was closed down for violating the land lease terms regarding its use. This has raised public concern about the permitted uses of industrial building units. 

It is well-known that there are many “hidden” restaurants operating in industrial buildings in areas like Kwun Tong, Lai Chi Kok, and Tsuen Wan. 

However, the legality of operating restaurants in industrial buildings and the circumstances that may lead to legal violations are often misunderstood.

● When is operating a restaurant in an industrial building considered illegal?

According to regulations, if you want to operate a factory canteen in a building in Hong Kong, you must have obtained a “Factory Canteen License” before commencing operations. 

As a factory canteen, it is only allowed to provide meals to the employees working in the building. Serving the general public is considered a violation of the regulations. 

Restaurants found to be in violation may face fines, closure, and in cases of repeated offenses, the lease may be terminated. 

Therefore, anyone planning to open a restaurant in an industrial building must consider the licensing restrictions and the issue of public access.

● Is it illegal to rent an industrial building unit for office or educational purposes?

Is it safe to rent an industrial building for setting up a company? 

This statement is not entirely correct because industrial building deeds generally specify that the units are to be used for “industrial and/or warehouse purposes” only. 

Except for the “Revitalization and Utilization of Industrial Buildings Policy” announced by the government in 2019, which allows certain designated non-industrial uses without the need for applying for a short-term waiver of land lease and paying fees. 

These designated non-industrial uses include art studios, audio-visual recording offices, design and media production offices, specific creative industry offices and research institutes, and design and development centers.

In recent years, there have been many pottery, painting, or self-baking classes set up in industrial buildings. However, art studios covered by the waiver do not include those used for teaching hobby classes or leasing the space to others. 

Therefore, for those intending to engage in the above businesses, it is necessary for the property owner to apply for a “Lease Modification” from the Lands Department and pay the related fees to operate legally.

● What are the risks of using an industrial building as a residence?

Given the high property prices and rental costs in Hong Kong, many people choose to live in subdivided units in industrial buildings. 

This has led to an increasing number of illegal conversions of industrial units by property owners for rental purposes. 

The government strictly enforces the laws and may issue warning letters to property owners who violate the land lease terms.

Additionally, many older industrial buildings have safety concerns, such as lack of proper fire safety equipment and maintenance issues with sprinkler systems, making them unsuitable for residential use. Accidents in such buildings can result in loss of life.

In fact, some renovated industrial buildings may appear similar to commercial buildings due to their trendy and stylish designs. 

Therefore, it is advisable for prospective business owners to consult with professional accountants and carefully consider the legal implications before setting up a company or selecting a location.

It is important to avoid unnecessary troubles and complications by not rushing into renting a property simply because of its affordability.

Every industry has its unique business management techniques. Engaging an experienced accountant will help you avoid unnecessary detours and allow your business to thrive and expand naturally.

Every industry has its “exclusive” business techniques. Consult with “Maxi Solution Accounting” who have over 20 years of experience to minimize unnecessary detours in your journey and expand your business.

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