BEIJING (Reuters) -The Chinese government has said the cost of renting a home in cities should not rise by more than 5% a year – its first move to cap rental prices and part of efforts to provide more affordable housing.
President Xi Jinping’s pledges to narrow wealth disparities with the goal of achieving so called “common prosperity” has put the plight of low income households and individuals at the forefront of policymaking.
Demand for rental housing has concentrated mainly in China’s largest cities, which offer better-paying jobs and the most employment opportunities, especially to fresh college graduates.
Rental housing is also popular among millennials unable to buy homes because of high barriers to ownership stemming from rising property prices induced by speculators, and restrictions imposed by authorities to curb such speculative purchases.
“New urban residents and young people have worked for a relatively short time and have little income, so their ability to buy homes and pay rent is weak,” Vice Housing Minister Ni Hong said on Tuesday.
“In big cities, 70% of new residents and young people rent homes, but homes that are more affordable are more remote and properties in more desirable locations are more expensive, posing practical difficulties,” Ni told a press conference that followed guidance on the cap by the housing ministry.
Home rental prices fell 0.35% in August from a month earlier after a seasonal peak in early summer, according to data released on Wednesday by Zhuge House Hunter, one of China’s largest independent real estate research firms, with tier-1 cities like Beijing leading the fall.
The decline suggests that the pool of homes for rent has further deepened. Beijing and Shenzhen began implementing measures this year to boost the supply of rental properties, heeding the government’s call to provide more affordable housing.
In recent months, big cities have also issued draft home leasing rules seeking to better protect renters’ rights, including bans on landlords demanding deposits equivalent to more than one month’s rent.
Authorities will also crack down on abusive practices by real estate firms and online property platforms such as overcharging renters.
The rules are part of a sweeping clean-up of the property market over the next three years to rid what the government describes as irregularities that have stoked speculation and pumped up home prices.
(Reporting by Ryan Woo; Additional reporting by Liangping Gao; Editing by Edwina Gibbs & Simon Cameron-Moore)
