Li Heqin was both elated and anxious when he was told in August that his job promotion to be a regional manager at an auto parts supplier would mean relocating to Shanghai.
Excited, because the promotion would mean stiffer challenges and bigger rewards, but anxious, because the move would require him to leave his own apartment and move into a rental — a potential nightmare in the current tight property market.
Or so he thought, going by his prior experience as a tenant. Li rented several homes in Huzhou in East China’s Zhejiang province before he bought an apartment there in February this year.
“I was really fed up of renting,” he said. “The property owner could call any time and ask me to vacate because he wanted to sell the property. I had to move as many as six times in nine years for such reasons.”
Millions of tenants — especially migrants, scholars and other newcomers to cities — across urban China will probably have similar tales of woe to share.
In China, about 140 million urban residents are tenants. And 196 million migrants are living in rented rooms, according to the National Bureau of Statistics.
As it turned out, Li’s fears were not realized. He found a suitable two-bedroom serviced apartment in Shanghai’s Jiading district. His rent of around 9,800 yuan ($1,500) per month is about one-third of his income.
Li said that he is quite satisfied, and was surprised that he had been able to find a decent apartment on a two-year lease with an option to renew the tenancy.
He was even given the freedom to decorate the place to his own taste.
Li is beginning to see that his long-held beliefs about life as a tenant may need to be revised. “Renting a home can also ensure a decent life,” he said. “If I could have such a place to live wherever I work, I wouldn’t really need to buy any property.”
Li’s vision could soon become reality in China as the supply of tenant-friendly homes is expected to increase in the next few years. What will make that possible is a wave of measures to make properties available for both leasing and sale.
The policy is one of the long-term mechanisms being introduced to ensure the healthy and stable development of the real estate sector.
Since March, a series of measures across China — covering financing, land supplies, household registration policy and policies for access to public resources — have been introduced to stoke growth of the rental market.
In Shanghai, for example, two land parcels were designated for the development of apartments for lease, and two commercial-use land parcels in a key area will be transformed into housing projects for tenants who work in a high-tech park. The housing projects will be complete with kindergartens and other facilities.
In Hangzhou, the local government has been piloting an online home rental platform, enabling transparent contracts and providing mutual reviews of property owners and tenants.
In Wuxi, in the eastern Jiangsu province, tenants who meet a set of criteria — such as having lived and worked in the city for a certain number of years, and participation in the social security program — will be able to receive household registration. They would also have the same access to public resources as property owners.
“Establishing a housing system that promotes both buying and renting makes it easier for migrants to settle in cities,” said Louisa Zhu, business development director of property consultancy Savills Residence.
“For developers, asset management and capital deployment can be potentially profitable.”
For residents, a change of lifestyle can open their minds to more housing options. And professional operators can provide them not only a more comfortable and safe living environment but also friendly communities, Zhu said.
For many tenants, major problems with renting have included a lack of transparency, inadequate information and absence of regulation regarding contracts, said Li Yujia, a researcher with the Shenzhen Real Estate Institute.
Owning a property and living in a rented home are very different in terms of living experience. That is one of the major reasons why demand has soared in the sales market and prices have skyrocketed.
Buying a home is seen as investment in a valuable asset with potential for appreciation. But when a home is no longer viewed as just a place to live, financial risks can develop, said Li.
However, Li can see the benefits that will result when the government policies begin to see an impact. If living in a rented apartment is so good that the gap between renting and owning narrows; if the development of both the rental and sales segments is balanced; and if policies supporting the residential leasing market are implemented, then the property market would see sustainable growth, he said.
Experts said it will take time for the nationwide residential property market to see full implementation of such policies, but the trend is now established and appears irreversible.
“Honestly speaking, it’s unlikely for all cities and all market players to embrace policies fostering the development of the for-lease market,” said an official of a housing authority in a second-tier city in Central China’s Hunan province, speaking on the condition of anonymity.
“Natural endowments of cities vary greatly. Smaller cities whose revenue is still highly reliant on land auctions and home sales, might have little incentive to support the home rental market,” the official said.
But for larger cities with big populations and significant local economies, the supply of affordable and decent housing is more important. Good quality rental accommodation is essential to attract and retain talent, which is key to a city’s growth in the long run.
The increasing mobility of talent in China is boosting demand for quality housing. A city that cannot offer quality accommodation risks losing talent to better options elsewhere.