China moves to cap costs of rental homes in cities

BEIJING • The Chinese government has said that the cost of renting a home in cities should not rise by more than 5 per cent a year - its first move to cap rental prices and part of efforts to provide more affordable housing.

President Xi Jinping's pledges to narrow wealth disparities with the goal of achieving "common prosperity" has put the plight of low-income households and individuals at the forefront of policymaking.

Demand for rental homes has been concentrated mainly in China's largest cities, which offer better-paying jobs and the most employment opportunities, especially to fresh college graduates.

Rental housing is also popular among millennials unable to buy homes because of high barriers to ownership stemming from rising property prices induced by speculators, and restrictions imposed by the authorities to curb such speculative purchases.

"New urban residents and young people have worked for a relatively short time and have little income, so their ability to buy homes and pay rent is weak," Vice-Housing Minister Ni Hong said on Tuesday.

"In big cities, 70 per cent of new residents and young people rent homes, but homes that are more affordable are more remote and properties in more desirable locations are more expensive, posing practical difficulties," Mr Ni told a press conference that followed guidance on the cap by the housing ministry.

In recent months, big cities have issued draft home leasing rules seeking to better protect renters' rights, including bans on landlords demanding deposits equivalent to more than one month's rent.

The authorities will also crack down on abusive practices by real estate firms and online property platforms such as overcharging renters.

The rules are part of a sweeping clean-up of the property market over the next three years to rid what the government describes as irregularities that have stoked speculation and pumped up home prices.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 02, 2021, with the headline 'China moves to cap costs of rental homes in cities'. Subscribe