An empirical study of contractual informality and governance of sub-divided units in Hong Kong

Abstract

This paper examines the effects of tenure security and governance of informal housing. Renters often face inadequate living environments and overpay utility charges. Meanwhile, variations in tenure security and living conditions constitute different costs involved in enforcing tenure and governance. Utility surcharge is expected to be affected by contractual formality and landlords’ governance strength with respect to potential hygienic problem and liveability deterioration based on a case study of Hong Kong’s sub-divided units. Results suggest that renters without stamped tenancy contracts and living in buildings with inferior hygienic conditions pay more for electricity surcharges. These provide practical implications for housing and welfare policy implementations.