State Council decision paves the way to give tenants a better deal

China is aiming to develop a housing rental market featuring diverse suppliers, standardized services and stable tenancies to ease pressure on renters amid surging property prices.

The State Council released a statement on June 4 setting this goal.

It came one month after a decision was made at a State Council executive meeting to establish a sound market for housing rentals with preferential policies. The meeting was presided over by Premier Li Keqiang.

The most attractive of the six measures states that tenancy contracts must not be arbitrarily altered or terminated by leasers, a phenomenon that has affected tenants for a long time.

Commercial complexes can be changed to residential leasing with a lower cost of electricity and tap water than previously. People leasing will also enjoy preferential tax policies, with no tax levied on those earning less than 30,000 yuan ($4,566) in rent a month.

According to the National Bureau of Statistics, 89.5 percent of the houses rented in China are owned privately, while in many developed economies institutional owners contribute 25 to 30 percent of the houses on the rental market.

The situation has led to a long-lasting problem in China. Tenants have often been plagued by careless termination of contracts or relentless rent increases by landlords, motivating the younger generation to buy their own apartments.

The average age at which Chinese buy their first apartment is 27. In comparison, many people making their first housing purchases in Japan are in their 40s.

In China, problems are more serious in first-tier cities such as Beijing and Shanghai than in smaller cities.

In Beijing, tenants paid an average of 4,453 yuan a month last year to rent an apartment, a year-on-year increase of 7.2 percent and accounting for nearly half the average monthly income of urban residents in the capital, according to B.A. Consulting, a research institute affiliated to housing brokerage company 5i5j.com.

In Germany, tenants' rights are protected by the Tenancy Law, which states that if a landlord wants to terminate a tenancy to allow a person to move into a property, that person must be a member of the landlord's household.

Tenancies are more stable in Germany than in China, where tenants have often been forced to find other apartments and pay an additional month's rent to agents.

Gao Yixuan, vice-president of the Real Estate Association at the All-China Federation of Industry and Commerce, said the measure allowing commercial complexes to be changed to residential leasing is a good test for supply-side reform amid an excess of commercial property.

Guo Yi, marketing director at Yahao Real Estate Selling & Consulting Solution Agency, said the measures are expected to result in more apartments being available for leasing, easing the pressure for rent increases, spearheaded by increased deals in the secondary market in first-tier cities from September last year to March.

As e-commerce booms, supermarkets and shopping malls are facing mounting pressure from declining numbers of shoppers.

"The central government is encouraging people to rent apartments and then to buy them when they can afford to," Guo said. "In return, these people can spend more money to boost domestic consumption and drive economic growth.""