Rental Restrictions: An International Issue

By David Swedelson, Partner, SwedelsonGottlieb, Community Association Attorneys


The Los Angeles Times reports (on January 1, 2013) that as a result of government imposed fees on investors that do not reside in their apartments (we assume condos) or buy to flip them, in Hong Kong real estate investors are scrambling to buy parking spaces that are not subject to the fees. “Single spaces are now selling for more than some modest Southern California homes. Someone paid $288,000 in November 2012 for a parking space in a luxury apartment complex on Hong Kong Island. Or the $166,000 tab for a spot in a suburban development called Festival City. A space attached to an exclusive cliffside townhouse community in the ocean view neighborhood of Repulse Bay fetched $385,000 in March. And those are just the recorded sales.”

Apparently, parking has “long been a prized commodity in land-scarce Hong Kong. Tenants outnumber available slots by as much as 20 to 1 in some residential buildings, creating strong demand for spaces.”

But this scramble for parking spaces is not occurring because of the buyers’ need for parking spaces. The article states that according to experts, “the recent price explosion is the unintended fallout from a government effort to cool red-hot housing values.”
Under pressure to slow housing costs, the Hong Kong government in the last year introduced curbs aimed at speculators. Starting in late October, a 15% “stamp duty” was levied on sales to non-permanent Hong Kong residents. A tax of 20% was imposed on properties resold within six months of purchase.

The result: Investors channeled their money into parking spaces, where the new rules did not apply.

We have posted articles on the 2012 change in the law that imposed restrictions on the adoption of rental restrictions, which you may review here and here. California Civil Code Section 1360.2 went into effect on January 1, 2012, a little over one year ago, and states that any new provision in a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests is not applicable to anyone who purchased before the date the governing document and/or amendment was adopted or recorded unless that person expressly consents to be bound.

So, while a new CC&R restriction on rentals will not impact or affect current owners, it will restrict investors who are buying properties for investment purposes. California community associations should consider CC&R amendments that limit the ability of an owner to rent or lease their unit during the first year or two of ownership to ensure that the owner is not buying the property for solely investment purposes.

For more information regarding rental restrictions and CC&R amendments, contact our office. Email Mark Petrie:

David Swedelson is a condo attorney and HOA lawyer, a senior and founding partner at SwedelsonGottlieb, Community Association Attorneys. David Swedelson can be contacted via email:

Contact Information