Shanghai's latest regulation bans group renting

Shanghai's latest regulation on apartment renting came into effect on Wednesday, which strictly forbids group renting, while apartment subletting will be supervised more effectively.

The new regulation was introduced to facilitate a more stable leasing relationship between property owners and tenants, while promoting a healthy and more manageable apartment renting standards to fulfill people's living needs, said Ren Yanrui, director of the Commission of Legislative Affairs of the Shanghai Municipal People's Congress.

Affordable housing will be provided in areas such as university campuses, industrial and commercial areas, and near major metro stations.

The new regulation stipulates that kitchens, bathrooms, balconies, storage rooms and other spaces not designed for living cannot be sublet.

Shanghai has 2.1 million registered rental apartments, accounting for 26.3 percent of the total housing number in the city. About 1.8 million of them are leased out by the property owners themselves, while about 100,000 of the apartments are rented through agencies.

To protect tenants, those subletting apartments for a profit have to register if the number of apartments they sublet reaches a certain number.

Also, companies that rent apartments to sublet should open a special account at commercial banks that serve as a firewall. If the tenants were to pay more than three months' rent and deposit that is more than one month's rent, the excessive part should go into the account to ensure that the money is not appropriated so as to protect tenants' rights.

If the companies fail to set up such an account, they will have to pay a fine of 200,000 yuan (US$29,670), according to the regulation.

To promote long-term apartment renting, landlords and sublet companies can't coerce tenants to change, annul, cancel or end the renting lease early through ploys such as stop providing water, electricity, heating, gas, or cutting down on other services.

In order to keep rents stable, a rent monitoring mechanism will be set up. If property owners and subletting companies want to hike the rent significantly, they can apply for the raise but only to a certain percentage.