Discussion keeps the world turning.
This is Roundtable.
Renting in China's fast -growing cities has had its challenges, but change is on the way.
This September, as a matter of fact, new nationwide rental regulations take effect, bringing updates for tenants, landlords, and the entire housing market.
What are those changes, and what will they mean for renters and property owners?
We are live from Beijing.
This is Roundtable.
I'm Steve. Thank you very much for being with us.
For today's show, I'm joined by Niu Honglin and Yuxin.
First, on the program.
In China's fast -growing cities, renting a home hasn't always been easy.
From confusing listings to deposit dispute, many renters have had their share of headaches, like walking into what was advertised as a bright studio, only to find it's actually located in the basement.
But changes are on the horizon.
Starting this September, a new set of nationwide housing rental regulations will come into effect, aiming to bring more clarity, fairness, and stability to the market for landlords, tenants, agents, platforms, and even local governments.
So we'll get to what these changes mean and what those new rules will look like in practice.
But let's start with what the housing market is like here, the rental market.
What does it look like here?
How does it work? Yeah, the rental market here in China is really, really huge.
And I am even part of this market.
Me too. Me too. We are well equipped to talk about this today.
So the advancement of urbanization is making China's urban rental population really, really rising.
And it has exceeded 200 million, making it the largest rental housing market in the world.
And as a result, rental platforms have become increasingly diverse and you can visit, let's say, offline agencies, many of which are conveniently located near residential communities.
Yeah, they're right in front of – they're easy to find, right?
Mostly. Yeah, if you see an apartment complex, oftentimes you'll see a house rental agency, a real estate agency located very close by.
Or you can just browse listings directly on online platforms. Some of them are developed by these brick -and -mortar stores also.
And some of which even offer VR tours for you to have that kind of virtual house viewing.
Those are my favorite.
I used to look at those even when I wasn't looking for a house to rent, just for fun to see what some different styles were like.
yeah so overall the information is relatively transparent now you can have all of the information online and in major cities like beijing and shanghai where housing tends to be more expensive many people opt for like shared rentals which means you share one apartment but different rooms um there are even there are even dedicated like co -living platforms that provide not just housing but also service like that will offer you a network also maintenance maintenance and also cleaning.
So the rent for these kind of accommodations is slightly higher, but still cheaper than renting an entire apartment on your own.
Yes, different cities around the world, different countries have different systems, right?
In Canada, you'll typically pay, and I want to ask about what it's like here in China in just a sec, but in Canada, you'll typically pay your first month's and your last month's rent up front as kind of like a deposit.
In Korea, they've got a completely different system there you have to make a down payment of like let's say five thousand dollars for a smaller apartment that's yeah that's considered a down payment that you get back at the end of your contract so you'll pay that down payment and then you'll pay rent so five thousand down and maybe seven hundred dollars a month or something like that the bigger the apartment gets the nicer it gets the higher that uh deposit goes up and the more rent you'll pay and then the final twist to that is the higher deposit you paid it can decrease the amount of monthly
rent so $10 ,000 more I'm saying dollars but it's 10 million 1 $10 ,000 more means you'll pay $100 less in monthly rent so you can negotiate that between the between the owner and yourself that is very interesting because previously when I was a kid I didn't understand the different system I thought it was all the same around the world because you rent a place how hard can it be but actually it's really quite different for instance like steve has just mentioned when it comes to paying the rent and deposit here in china is you pay a month of rent as deposit and you get it back so it's not like at the the last
month you do not pay you still pay for the last month and you get it back if the house is still intact right if you tear it up maybe there's no rent for that month it's a security deposit it's a security deposit and also Also, here in China, it's very common, like Yushun said, that you're renting a place, you're only renting a room or a bedroom and you are living with other people.
And mostly you do that directly with the landlord instead, instead of with the people who have just got the entire apartment and sublet it to you.
But that does exist. Whereas in other places around the world, I think in Australia, more commonly, even even for exchange students, they would rent an entire house and then be the secondhand landlord for other exchange students.
And usually they would raise the rent for every bedroom slightly higher so that at the end of the day, as the secondhand landlord, they are paying less than all the other people.
So the system can be quite different in different markets.
Here in China, my feeling is that I have been renting for more than 10 years.
And my feeling is that it's relatively more transparent, it's relatively fair, in the sense that if both of you are renting a place, instead of negotiating about, oh, I got the place, I found the place, I rent the place directly from the landlord, so I'm paying less, even though I am occupying the larger bedroom that rarely exist yet problem does exist for a different uh type of houses for different relationship between the landlord and the renter for sure one of the other uh changes just before we get to the new regulations that i noticed um upon uh coming to beijing is when and i don't know
if this is true for all places or not so you can you can educate me here but you don't just pay your deposit and then pay your first month's rent in the first month your second month's rent in the second month you pay quarterly do I understand that correctly where you pay three months rent and then you know when that runs out then you pay three months more rent is that that yeah was I correct when I saw that it's relatively common to see that but you can definitely negotiate with your landlord I see yeah maybe it's quarterly or even for like half of year You can pay for like the whole half of year
of your rent first, and then maybe you can negotiate with your landlord. Maybe the monthly rent can be lower.
That's up to you and the house owner.
Okay. All right. So let's get to it then.
So what prompted China to introduce these new national housing rental regulations that again, will come into effect this September?
So as we mentioned, there are still some issues in the rental market, and there are some examples.
And one quite popular or just sparked a lot of discussion one is chuan chuan fang, which means the old apartments that get some quick refurbished right after the people who just moved out.
And then when the landlord are doing these kind of things, the materials they use for refurbishing may be not that good, which is not safe for the up -following renter, right?
So examples like this, and also a renter experience kind of became a hot topic online after the landlord used Spotlight to inspect the apartment during move -out and demanded over 10 ,000 yuan in damages.
Which was probably the deposit, I would think.
Yes, they'll give all of the deposit back.
That happens in Canada, and I've seen it happen in Korea, too.
And this is, you know, that's a tough one because you signed this contract saying, you know, this is the state of the apartment when I move in.
And then if the landlord is being unfair at the end of the contract, they can say, oh, but this scratch wasn't here and that scratch wasn't there.
So you're not getting your deposit back.
Yeah, that's a common complaint in many parts of the world.
And as a veteran renter, there must be different types of problems you will encounter, mostly because of the relationship between you and the landlord are very depending on the situation.
For instance, as a renter, you might, when you decided that I'm stop renting, I'll go find a different place at the very last month, it is possible that the landlord would require you to give them access to the room so that they can take potential future renters to see the situation.
It's totally fair. Yet, if they come, I don't know, three times a day, it's definitely a problem.
And as a landlord, if your renter tell you that they want to stop renting the minute before they leave, it's definitely also a problem.
Or if they say, I will move out by the end of the month, but they don't, it is a problem.
if they do not pay for the electricity or water they use, and they just decided not to do that, it's a problem.
If they trash the room, it's a problem.
So problem does exist in different scenarios.
And on both sides. On both sides.
So the problem here is that for all these phenomenons, we do have relative departments to regulate it, to oversee it, yet it's not that clear who's responsible for what problem say if my renter trashed my apartment who do I go for who can help me deal with the situation or if for some other problem if my renter is staying in the apartment but being very very loud and annoying all of the neighbors who are essentially my neighbors and they complain about the situation who should I talk to so these these are, I think, essentially resulted, these result in having a new regulation, making things very
clear about who's responsible for what kind of problem.
And if I have problem, who should I go to, to solve these?
Yeah. And from the rentees side, you know, if things aren't working in the apartment and the landlord's not being responsive, you know, where do I, where do I turn in that situation?
Right. So these rules and regulations are being put in place, not to punish anyone in particular, they're being put into place.
So it's almost like a safety net for everyone who's involved you can look at it like that yes and most of these regulations are not just being put in place they're more like being stated clearly than before all right so let's get to the specifics then uh what are the highlights under the new rules yeah first of all this is a new rule and regulation that is going to be taken into effect At the date of 15th of September and for landlords or lessors no you know no non -residential spaces cannot be rented as homes and that is the situation when you know back then there are you know people or landlords
using like let's say kitchen or living room and turn these rooms into bedrooms. and not telling the renter that they are actual they're they're not kitchens so they would take a kitchen and turn it into another bedroom through different furnishings and construction whatever needed to take place can be quite dangerous and then rent that space out as an extra bedroom okay got it yeah so and actually this kind of phenomenon has been there for a while and you you know, this is called like 隔断房 or partitioned rooms, and it is also considered illegal constructions.
And there have been regulations in place to prohibit such practices for quite some time, as I mentioned.
One example is that I think as early as 10 years ago, Beijing carried out, you know, crackdown and also demolished many of these illegal structures structures due to the you know significant safety hazards they pose and also 2018 in Kunming in southern China's Yunnan province there has also been you know related regulations to ban these things and this time however I think is more like a nationwide and more detailed and comprehensive regulation aiming to fully ban this type of illegal construction so it's not across the country.
It's not that that issue is new.
It's been around for a while, and they've tried to deal with this issue in the past, but now it's being dealt with or will be dealt with come September, mid -September, on a nationwide basis.
Okay, understood. Yeah, that would be problematic, wouldn't it, for the renters?
Of course. What about the deposits?
Will there be any adjustments Of course, we see rental contracts must clearly state conditions for deposit deductions.
No more excuses that Steve has just mentioned.
A scratch on the wall, a broken light bulb.
These can no longer be the excuse of not returning the deposit.
And also, landlords or rental service providers can't barge into the rental unit whenever they want, even though their excuse is that you stop renting, I need to show the place to people, that can no longer be the excuse.
And when it comes to different relationships, we see good landlords and we see sometimes have some fishy landlords, they refuse to change, for example, a broken lock for you, or they want you to pay for it.
Because when we're negotiating the contract, you have to, one, it is stipulated that these terms need to be in the contract.
It's actually saving or it's saving trouble for both ends.
Yeah. And it's things that you should think about when you're signing a contract in the beginning, right?
You know, make it very, very, very clear.
Even if it's in the contract, sometimes contracts can be confusing, right?
Right. So just don't be afraid to ask questions and make it clear for yourself and for the landlord, too.
I understand the aspect of the landlord wanting to come into the apartment when you are going to be moving out because they need to find somebody.
That income that they had from you is now gone.
It went from, you know, 10 to zero, essentially.
So they need to find somebody to come in there.
So I understand both sides.
Yeah, if you're six times a day, then obviously that's going to be problematic.
But if the landlord can't get in touch with the person who's renting, say, oh, sorry, I'm never home.
And you can't go in there if I'm not there.
Well, then that's not exactly fair either.
And also there are more detailed and intricate situations for different renting relationships.
For instance, here in the Chinese market, there are some houses saying that they only rent to single girls.
So you cannot bring your boyfriend in because you will disturb other renters.
And for those kind of situations, if one brings in a boyfriend to stay over and it is a problem to other renters, it is really hard to complain face -to -face to people living with you.
But you can report it to the landlord, and the landlord can deal with the situation.
And in other cases, maybe one of the landlords clearly stipulates that my house cannot be open to pets.
You can find other homes that will allow you and your precious little friend to stay in.
But my house, maybe because I am allergic or there is a certain agreement between me, myself and my neighbors, I just can't accept that.
And they have the right to see it through.
So situations can be quite tricky.
And having them clearly stated in a contract would avoid these kind of little frictions in the relation become major conflict.
Yeah. When I had my dog Heidi before in Korea, there are many places that don't want you to bring your pet in there.
And I never wanted to lie.
Right. Some people will do that.
They'll just kind of sneak their pet into the apartment.
That's a bad idea. Right.
So I would always sign a separate contract agreeing if there was any damage done by the pet, then I would pay for that 100 percent.
So that was always a problem solver there.
Okay, so that's from the renter's side, kind of keeping them safe.
What about the housing rental enterprises or the agencies, or you mentioned before, yeah, it can be online as well.
What about the rental platforms?
Yeah, as we mentioned, I think many of these regulations, they're more like of, you know, they're more of focusing on enforcement and nationwide implementations, because we've mentioned a lot of these things and these things can be agreed in the contract by both sides, right?
And I think another one for this, for rental enterprises and agencies, first of all, we nowadays have many like subletting or co -living services are provided by agencies and online platforms. And these platforms act as intermediate REs and tenants pay rent to the platform and the platform in turn pays the landlord according to the signed contract, right?
And then profiting from the price difference.
However, if something goes wrong with this platform such as bankruptcy, tenants could end up losing both their money and their housing and that is the issue that may happen when some of the platforms is not that reliable and then there is this new regulation saying that you need to have a regulated public account to make sure that the money of the renters and also the landlords is safe.
So let me make sure I understand that correctly.
In this specific situation you just described, a platform or an agency will rent the house from the landlord. So So in that sense, then the agency is the tenant, but they don't live there.
They'll go ahead and rent it out on their own to somebody else, and they'll receive the money.
So that makes the agency kind of a middle person there.
Yes, exactly. But if something goes wrong with the agency, there's no protection for the tenant.
I mean, I guess they could be evicted almost immediately, right?
Because, yeah, that's an easy one to understand why that move was made.
And there's lots and lots and lots of rental agencies as well.
Yeah, so these rules, they're looking to kind of close loopholes, I suppose.
They're looking to eliminate the gray areas.
They're looking to eliminate the financial risks for both tenants and landlords.
From the business point of view, I guess it's kind of a double -edged sword because it's a safeguard for sound operation, but I guess there would be challenges for small firms that lacked financial transparency and compliance.
So the bigger the agency, then the easier it would be to operate.
But it's not easy for everyone to operate, I suppose.
And if you think about China's renting market, I can still remember around 20 years ago, when I was still living with my parents and we were renting places.
It's common to see renters paying the landlord by cash.
So they're essentially avoiding tax or avoiding being taxed.
The landlords are doing those things.
And at the same time, if something happened, it's hard for you to negotiate with the landlord without a very clearly stated contracts.
contracts and also things moving on a little bit we here in china we started to have a reporting system so that if you're renting a place or if you're buying a place you can report the situation into the system so you can have a certain deducts of your tax base money so that avoid that situation and later on so if you're renting and you report it to the system then it can have i I think it's a 3000 yuan deduct every month.
And besides that, there are also or maybe maybe my memory was not that clear, but it depends.
And besides that, I often think that China's renting market offers a lot of different choices.
For instance, we talked about people living like five or six people living in the same apartment, two bedroom apartment being very being dangerous and not OK.
Yet, besides those illegally separated spaces for people, there are cheap houses and apartments in relatively not that center of the city.
My nanny used to rent a place with only 500 yuan a month.
The place is quite shabby, to be honest. It's only a one -bedroom little apartment and no bathroom.
you have to use public bathroom, public kitchen, and also not, they do not even have a central heating system, yet it's quite cheap.
And for her, the needs is only to stay once or twice a month and also store some of her things.
So it is quite a good choice.
Yeah, right. Yeah, it makes sense.
It makes sense. And that is the situation in China's renting market, you have quite expensive, ready -to -just -go -in -with -your -back kind apartment that has all the furniture in, but also there are the apartments that cater to the needs of those who just started to work in the city, migrant workers, or young college graduates who cannot really pay that high of a rent.
Well, Yushan and I, we were chatting before the show today, and I said, you know, it must be quite challenging for young people because of the system where you have to put your security deposit and you have to come up with three months rent or more if it's depending on the system right but that one -time payment in the very beginning can be a lot of money right so it's very easy to understand why there are so many different shared apartments here and that is why I think here the policy is also sending a message that even if you are renting a place that only requires I don't know a hundred several hundred
yuan a month of rent you still deserve good service you deserve deserve to have a healthy and lawfully protected relationship with the landlord. And these are trying to eliminate those safety hazards and trying to make sure that one, you have a problem, you have a place to solve the problem.
Yeah, it absolutely makes sense.
All right. So those are some of the changes that are going to be made.
Are these changes going to be easy to implement?
Are there difficulties coming here?
What can we foresee?
Yeah. One thing is that this market is really, really huge.
And with many individual landlords and scattered listings, especially in big cities, it's difficult for regulators to actually track the rental activity in real time.
And the data is showing that China's rental population is nearly 260 million as of 2023 and is projected to exceed 300 million by 2025.
That's the data given by Beike Research Institute.
and cross -agency coordination is also quite complex. Supervision involves multiple departments like housing, market regulation, and also finance, yet data sharing and joint enforcement are still weak.
And that makes that no matter it's the renting part or conducting the contract part, it could be very complicated.
But the thing is that when you have a clear contract and both of you have sit down and have the agreement, as long as it is fair to both sides, it is.
This is why it needs to be black and white.
Right. This is why it needs to be ultra clear for the renters and the renties, because it's so think about that.
Three hundred million by 2025, by the end of this year.
Right. So how do you keep your eyes on all of those at the same time?
This is the challenge of implementing regulations like this.
And that's why you take it down to the level to the people who are signing the contracts and make sure they know what's going on.
Right. All right. Well, what about rent prices?
Are we expecting them to go up or down with these types of changes?
Well, we would definitely expect more stable rents because now we can no longer, well, hopefully, less and less, hmm, I'm going to take your deposit away kind of situation.
People might be more confident about the renting market, meaning that more people might start to rent a place or rent a better place, meaning that the price can be relatively more stable.
And also when we issue policies, it's never just this one policy taking effect.
It's being affected by other policies, by other situations.
For instance, in different cities and provinces here in China, they have different types of relatively affordable public renting houses.
These houses are accepting subsidies from the local government, meaning that the rent would be definitely lower.
Yet, in order to apply for such renting, you must be in certain situations, either that you just graduated or have to qualify.
So these kind of policies also exist in the Chinese renting market.
That is, the government, central government, is encouraging local government to provide more of these relatively more affordable houses so people with real needs can find a good place to live.
And many people are saying not only are they looking for a good place, well, looking for a place to live, but a better place, a good place to live.
I'm curious to see what will happen with housing prices because it's possible, isn't it, that there will be a shift from renting to selling for the owners?
Because if there are tighter rules on deposits, for example, or contract terms, and what parts of a home can be rented out, then it might encourage the owner of the space to sell it as opposed to rent it, because it may be a little bit more difficult to make more money from that.
But that's something we can't really predict.
We'll have to wait and see what happens there.
So what are we looking at then in terms of the future of renting in China?
I think overall, the new regulations and also experts are saying that new regulations are a little bit of tilting toward renters to make sure the rights of the renters are guaranteed.
And also, this nation has always been trying to and also working on ensuring the right of renter and buyers to be the same.
So the regulation is encouraging landlords and tenants to establish this kind of stable rental relationship in accordance with the law and promotes equal access to public services for both renters and also homeowners.
And this helps actually steadily advance the policy of what I mentioned, the equal rights for renters and buyers and allowing long term tenants to better integrate into urban life.
And again, this is all meant to protect all parties involved at all times.
