Shanghai moves further to foster home rentals

Shanghai has published an implementation guideline to foster and facilitate its development of home rentals as the city government moves to tip the scales to balance renting and buying.

By 2020, a home renting system that involves multiple entities and provides various products shall be generally established under standardized management, the city government said in an official document published today.

Residents, including people with registered residency and those who stay in the city for over six months, who rent houses in Shanghai will be entitled to basic public services through a couple of ways which include application for residence card, application for a residence permit evaluation by accumulating 120 points, and registration of separated registered and actual residences.

Basic public services mainly include rights to local education resources, medical and social security insurances, and housing provident funds.

In addition, the city will pick up its pace to build an online home rental platform and establish offline home rental service centers at both municipal and district levels. Rental costs will be monitored to offer insight into the local home rental market.

To facilitate its development, supply of rental homes will be boosted through a number of ways that mainly include the release of land plots designated for rental uses and the conversion of commercial and office projects into housing development.

A long-term mechanism for home renting management will be established in the city to further regulate the rental market and strengthen industry supervision, according to the document.

Under an earlier released five-year plan through 2020, about 1.7 million new housing units will be added to the local market, among which 700,000 units will be for residential leasing purposes.

Residential leasing units will be mainly located in areas with densely populated employees and convenient access to metro lines. Facilities such as property management, convenience stores, laundry rooms and recreation and fitness centers will also be added to improve tenants' living environment.

Initially, state-owned enterprises will be particularly encouraged to tap the home rental businesses to increase the supply of leasing units as quickly as possible and to stabilize rental levels. Commercial banks are also encouraged to offer credit support for these enterprises preferably with innovative financial products and services.

Shanghai, coupled with a number of cities around the country including Beijing and Guangzhou, is aiming to create a housing program more balanced between home ownership and rentals,  in its effort to provide a long-term solution for an overheated real estate market.

The latest move is in line with the central authorities' comments made at the Central Economic Work Conference in December that "houses are built to be inhabited, not for speculation."

By the end of 2015, rental units only accounted for about 20 percent of the city's total 9.1 million residential units, lagging far behind international levels, according to Cushman & Wakefield data.