Is Chinese law pro-landlord?

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The Chinese law is definitely pro-landlord, even the rental housing sector is heavily regulated. The landlord is covered by the deposit and they can freely select the tenants… but that’s not all… and you will soon understand why the services of a professional real estate agent is not useless. Expatriates living in China get often frustrated with their Chinese landlords.

As long as the landlord agrees, you can add terms in the contract to protect yourself and your family against unfair practices often happening in China. We are listing some examples here, but each situation requires to be checked carefully.

Rent is freely agreed between the landlord and the tenant

China has still old rent control laws, inherited from the Cultural Revolution. The rent is freely agreed between the landlord and  the tenant. The rent varies depending on the compound, the building itself (construction phase), the location, the floor elevation, the decoration, the equipment & furniture…

Besides, the rent may be adjusted according to the provisions of the contract. At the end of the contract, the landlord will usually suggest a rise, and as it is not regulated by the law, it can be significant.

Some landlords will ask you for 6 months or even yearly payment, in that case, the rent should be below market prices, as few tenants would accept such payment terms.

Deposits

The deposit amount depends on how you pay your rent and it will be kept by the landlord on this personal bank account. In theory, the deposit has be returned to the tenant right after (the term should be written in the contract) the check-out process is done. The landlord can deduct the amount of reparations and unpaid bills (heat, water…).
The deposit will be adjusted when there is a rent adjustment.
The deposit can’t be used to pay the rent.

  • monthly payment: 2 to 3 months deposit
  • every 3 months payment: 1 month deposit

Duration of the contract, renewal

The contract duration is usually 1 year, renewable 1 time. However, if you can negotiate with the landlord and get longer contracts, which can help to limit the rent increase, in case you plan to stay for a couple of years.

Premature termination of the contract by the landlord

The landlord can terminate the contract before the expiration of the term if:

  • The tenant does not pay the rent or the deposit. There is a fine for late payment and after a certain period of time, the landlord can ask the tenant to leave the property.
  • The tenant rents the property to a third party without the landlord’s consent.
  • The tenant causes damages to the property or changes the layout / structure or does decoration without the approval of the landlord. The landlord may ask for compensation or will require that you put it back to the original condition. If not, the landlord can deduct the compensation from the deposit and ask for additional money if necessary.

Sometimes the landlord wants to terminate the contract for no reason as mentioned above (unilateral and premature termination of the contract), he should inform the tenant in advance and in some cases, he can pay rent to you. In China, you will often hear stories about tenants being asked to leave their apartment right before the Chinese New Year, usually under short notice…

Premature termination of the contract by the tenant

The tenant can prematurely terminate the contract if the landlord fails to make the necessary repairs to keep the property in habitable conditions. In that case, the tenant should get the deposit back.

In other conditions, the tenant can terminate his contract earlier, but he will lose the deposit and he should pay the rent in advance.

 Commission / fees

In China, the tenant will pay for the agent commission for cheap rents (<6000 to 8000 RMB), whereas the landlord should bear the commission for high rentals. The commission of your agent will be equivalent to maximum one month of your rental fee, but often landlords negotiate to make it less…

 Management fees

They should be born by the landlord: make sure the contract stipulates it.

 Other stuffs a good agent will care for you…

A good agent will not only check that all the required papers are in line with the law (landlord ID, property certificate…), but he will also negotiate for you the best terms for the contract (payment terms, deposit, fees included in the rent such as TV, cable TV, internet, electricity, club house….) and he will make sure the apartment will be delivered in the conditions you’ve requested (repair, addition of equipments, furniture, wall painting,…) by performing a pre-checking before you move in. Usually the heating fees are included in the rent.

You will also need a receipt 收据 (shouju) for your payment and if your company pays the rent for you, your finance department will require a fapio (official receipt). As the landlord will have to pay taxes to print the fapio (~ 5%), he may ask you to increase the rent accordingly… also something that your agent can help you to negotiate!

Paper work for the police registration: in Chaoyang, most of property management companies will issue a certificate for you to register at the police station. If not, you will need a list of official documents from the landlord.

In case of disagreement, the Chinese version of the contract will prevail. You need to have a good translation of the contract and you should be able to trust your agent for the translation he will provide.

A good agent will also be available during the whole duration of the lease… many things can happen: broken internet connexion, electricity, broken appliances, water leaking, heating or air conditioning issue, noisy neighbours.
Sources:

http://www.bjd.com.cn/10beijingnews/201306/26/t20130626_3831131.html

http://usa.chinadaily.com.cn/epaper/2013-06/25/content_16656063.htm

http://www.timeoutbeijing.com/features/Property/20768/Beating-the-system-renting-in-Beijing.html

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About Marketing

I am living in China since 2007. I am sharing my experiences for other expatriates to make their stay in Beijing more enjoyable. As I am writing this blog for SCOUT Real Estate agency, I am also computing updates about the Real Estate market in Beijing, not only on residential properties, but as well on commercial locals and offices. Hope you enjoy your reading!