China will uphold long-term leasing as a cornerstone in developing the rental housing market, with a spate of policies on the way to encourage people to rent instead of buying.
The first official reference to “long-term leases” during the annual Central Economic Work Conference, which concluded on Dec 20 and charted the economic development course for next year, suggested Beijing is determined to drum up support for the leasing market, experts said.
China will move faster to “put in place a housing system that ensures supply through multiple sources, provides support through multiple channels, and encourages both housing purchases and rentals”, according to a statement issued after the meeting.
It also pledged to develop the housing rental market, especially long-term leases, protect the rights of concerned parties, and support the development of professional and institutional housing rental enterprises.
Such moves reflect a shift in real estate regulation from the demand side to the supply side, signaling the key role that the rental market can play in curbing home prices, said Xu Xiaole, chief analyst at the research institute of Homelink Real Estate Agency.
“In the future, ‘housing problems’ and ‘real estate problems’ would be two different concepts,” Xu said. “For the low-to-mid income population, the government would strive to provide sufficient rental homes, while high-end needs will be largely met by the market.”
The directive followed an initiative earlier this year to increase the allure of rental homes through the expansion of public amenities in a number of large cities, such as providing equal access to schools for tenants and homeowners.
To make rental homes an attractive alternative, it’s imperative to let people benefit from reasonably-priced long-term rentals that provide a consistently sound living experience, said Liu Weimin, a researcher with the State Council Development Research Center.
“One option would be injecting more private capital into building pilot long-rental apartment projects that target specific groups such as skilled workers or migrants.”
He predicted that upcoming reform would focus on land supply and financial options.
The continued emphasis on developing the rental market has heralded a wave of new entrants eager to capture a share of the segment.
Since the middle of this year, the country’s tech giants such as Alibaba Group Holding Ltd, Tencent Holdings Ltd and JD have entered the home leasing market, creating online systems that include apartment searching, contract signing and payment.
By connecting prospective tenants with housing information, they vowed to use their troves of consumer data, online payment technology, and credit rating systems to prevent fraudulent deals and sudden rate hikes.
Spearheaded by Alibaba’s Sesame Credit, China is also piloting deposit-free apartment rental in eight cities, employing algorithms that track and rate people’s credit worthiness to protect both tenants and landlords.