Will young Chinese choose to rent houses and live their lives in a similar fashion to how Chandler, Joey, Monica and Rachel got by in the television sitcom “Friends”?
With cities introducing policies for equal rights for tenants and landlords to cool an overheating property buying market and real estate developers injecting more cash in rental market, the answer might not be so obscure.
Nanjing, capital of East China’s Jiangsu Province, on Aug 18 became the second Chinese city after Guangzhou to grant equal rights to both parties of lease agreements, while Beijing announced a day earlier it is soliciting public opinion on implementing a similar policy.
The municipal housing commission also said that all newly developed apartments for rent should lie in populated areas within a 15-minute walk of health care services.
The moves are part of the central government’s effort to make homes more affordable for rent. On July 20, nine ministerial departments jointly launched a pilot rental program in 12 major cities with net population inflows – cities that are a magnet for migrant workers and students.
Renting as good as owning?
With same access to public services as homeowners, tenants may qualify to enroll their children in neighboring school districts, and remove the need to buy homes with skyrocketing prices in areas with good schools.
“We encourage house rental agencies to create lease contracts whose terms are no less than three years, so that tenants will have a stable home and reduce the need to buy one,” said Zhao Xiuchi, president of Beijing Real Estate Law Society.
“In China, the property itself is not the issue. It is the scarce resources attached to it that is the problem,” said Qin Shuo, a financial commentator.
The question is how far can these policies go before taking real effect.
Several insiders to the real estate industry noted that a policy to strike a balance between buying houses and renting them was put forward during in 1998, but failed.
Will young people go rental?
Young people in Shanghai hold different opinions about renting a space to live.
“Buying and renting have their different advantages. If you buy, that gives you some form of stability, but a rented apartment is never really yours,” one guy told CGTN.
“Young people have a lot of career opportunities, and those are reduced if you’re tied to an apartment. If they don’t mind renting, it gives them more flexibility,” said another woman.
Official data show that about seven million college graduates join the labor force each year – and they tend to go wherever opportunity takes them.
A third of the graduates who were born after 1990s are willing to live in frugality in order to save money to buy a property, but over 55 percent would choose not to purchase a house to avoid unbearable mortgages, according to a report published by the Chinese Academy of Social Sciences in 2015.
Real estate developers now renting?
About 90 percent of homes available for rent are leased by individual landlords, according to Liu Hongyu, director of the Institute of Real Estate Studies. He said in a mature real estate market, homes up for rent managed by professional leasing institutions should be 30 percent of the total.
Independent companies providing long-term rentals, such as Mofang and You+, have been mushrooming in China. They succeeded in consolidating their presence on the market and have made unique brands for themselves based on how they manage the apartments they lease.
However they are usually small scale businesses and burn cash to cover up their expenses.