Government May Limit Rent Increases to 3%

Rents in big cities like Beijing and Shanghai have continued to soar. Some government officials suggest limiting rental increases to no more than 3 percent at a time. However, others question whether such a standard could be successfully implemented.

Let's find out more with reporter Liu Min.

Big city dwellers in China face a dilemma. Apartments are too expensive to purchase, and rents never stop going up. Many tenants have experiences like these:

"If the landlord increased the rent little by little, then I could accept it. But otherwise I have to move again. The fact is I always have to move after a while."

"Some landlords get you to pay the first three months of rent, and then ask for higher rent later. If you can't pay it, then you have to leave."

Some officials from the Beijing Ministry of Housing and Urban-Rural Development have suggested the government administrate the property leasing market by amending the law. Landlords cannot end the contract before its legal duration, or increase rent before the contract expires. Deputy Director Qin Hong from the Beijing Ministry of Housing and Urban-Rural Development says rent increases should be limited to 3 percent at a time.

"There are two reasons to limit rate increases to 3 percent. The government usually takes action to adjust the economy when the CPI reaches 3 percent. We can also learn from other countries; for example, the city of New York set a rental increase range of 3 to 6.5 percent in 2006, so 3 percent is a suitable rate level."

The high prices of apartments have frightened away many potential buyers, forcing them to rent in order to stay in the big cities. Demand for rentals this year has greatly exceeded supply, leaving the leasing market in disarray, says Lin Qian, vice president of the real estate agency Homelink.

"Take Beijing for example-many serious issues have emerged in the market, like group renting and subletting. We've also seen many second-, third-or even fourth-and fifth-time sub-letters. They have changed the original function of the apartments, endangered the house itself, and made the market unstable. It's time to administrate the messy market."

Government officials like Qin Hong say protecting tenants' rights and preventing bubbles in the market are the main goals for such a limit. However, many industry insiders say it will still be very difficult to track every landlord's lease records without a third party keeping track. Qian says,

"The critical thing is how to discover that a landlord is violating the rule by increasing the rent more than 3 percent. That can only be tracked if the landlord leases the place to the same tenant, but if the lease is to a different tenant, it will be more difficult to track. Currently, there are few records on leases kept by any organization in Beijing."

But some market insiders also admit the government's resolve for standardizing the rules in the rental market seems to be strong. This creates hope that one day tenants won't be chased out of their homes by skyrocketing rents so often, as some are now.

For CRI, I'm Liu Min.