China's Rental Housing Market Enters Legal Framework

China's State Council has established strong regulatory measures to address chaos in the housing rental market. The Housing Rental Regulation, signed by Premier Li Keqiang, will take effect on September 15.

Consisting of 7 chapters and 50 articles, the regulation aims to protect the rights of landlords and tenants, stabilize rental relationships, and establish a balanced 'purchase-rental parallel housing system' that promotes equal development of home buying and renting.

Key Regulatory Provisions

The regulation emphasizes both market leadership and government oversight. Rental housing must comply with building and fire safety regulations and mandatory standards, and must not threaten human safety and health. Notably, it prohibits the separate rental of non-residential spaces for residential purposes.

Rental contracts must be concluded under real names, and rental companies must disclose truthful and accurate property information. For subletting businesses, they must establish rental fund management accounts according to regulations.

Brokerage agencies must verify the identity of clients and property rights information before posting listings, and conduct on-site visits to prepare property condition statements. Service fee items must be explicitly disclosed.

Supervision and Penalties

Municipal-level and higher local governments will establish housing rent monitoring systems and regularly publish rental rate information. County-level and higher government real estate management departments will implement tiered and classified management based on the credit status of rental companies in cooperation with relevant departments.

The regulation stipulates strict legal liability for illegal actions by landlords, tenants, rental companies, brokerage agencies, and government officials.

Market Impact

As the Chinese government has announced plans to expand rental housing supply through various channels and foster market-oriented professional rental companies, this regulation is expected to serve as a framework that controls disorderly market expansion while promoting healthy growth.

In particular, the ban on non-residential space rentals and mandatory real-name contracts are expected to contribute to improving poor living conditions such as illegal rooming houses and basement rentals that have been problematic.