Release Of The First Top Regulatory Document After Eggshell Explosion

On April 26, the Ministry of housing and urban rural development, the national development and Reform Commission, the Ministry of public security, the State Administration of market supervision, the state cyber information office and the China Banking and Insurance Regulatory Commission jointly issued the opinions on strengthening the supervision of light asset housing rental enterprises (hereinafter referred to as the opinions). This is also the first top-level design document related to the rental industry issued by the regulatory authorities since the eggshell apartment explosion.

Top level supervision

In terms of content, the intention of "opinions" in stabilizing the leasing market and preventing risks is very obvious. According to the document, in recent years, China's housing rental market has developed rapidly, the overall market operation is stable, and the rent level is stable, which has played an important role in solving the housing problem of residents. At the same time, some asset light housing rental enterprises (hereinafter referred to as housing rental enterprises) use the mismatch of rent payment period to establish a fund pool, control housing resources and drive up rents. Some even use the tenant's credit to obtain credit funds and carry out financial business in disguise. Recently, a small number of housing rental enterprises have broken the capital chain, which seriously affects the legitimate rights and interests of the parties involved in Housing leasing.

In terms of specific measures, the opinion states that the period for a single rent collection by a housing rental enterprise shall not exceed three months in principle. When a housing rental enterprise collects rent for more than three months or deposits for more than one month, it shall include the collected rent and deposit into the supervision account, and pay the rent to the owner of the house and return the deposit to the lessee through the supervision account.

At the same time, the housing leasing enterprises shall not carry out financial business in disguise, shall not embed the relevant contents of housing rental consumption loan into the housing lease contract, shall not use the lessee's credit to obtain the housing rental consumption loan, and shall not induce the lessee to use the housing rental consumption loan in the name of rent installment and rent preference.

In addition, the Ministry of housing and urban rural development will share with financial institutions the list of housing rental enterprises with high-risk operation behaviors such as "high in low out" and "long-term receipt and short payment". Financial institutions should conduct risk assessment on enterprises, strengthen list management, and shall not issue loans to enterprises listed in the above list.

The Opinions also pointed out that both sides of Housing leasing should be actively guided to reasonably determine rents and stabilize market expectations. We should give full play to the exemplary role of housing rental enterprises, especially large and medium-sized ones, in stabilizing the market rent level. We should strengthen rent monitoring in the housing rental market, pay close attention to the abnormal rise of regional rent, and take necessary measures to stabilize the rent level if the rent rises too fast.

Since the regulatory authorities first proposed "simultaneous development of rent and sale" in 2014, the leasing market has entered a period of rapid development. However, due to the lack of standardization, vicious competition has emerged in the industry, and some problems have begun to accumulate. In 2020, under the direct influence of the new crown epidemic, the risk of the industry will break out, and the eggshell apartment will explode, which will naturally encounter disputes over rights protection.

Since the end of last year, regulators have repeatedly mentioned the leasing market. This year's government work report pointed out: "standardize the development of the long-term rental housing market, reduce the tax burden of rental housing."

Multi pronged approach

According to the documents issued by the six departments, the shell Research Institute believes that the guiding opinions emphasize multi pronged measures in terms of measures:

The first is to manage the entrance. Enterprises engaged in housing rental business and natural persons who sublet more than 10 sets (rooms) of houses should register as market entities according to law, obtain business licenses, set up independent accounting legal entities for cross regional operations, and push information to the competent authorities of the cities where they are located, so as to be able to manage and prevent some enterprises from breaking away from the supervision of the government.

Second, the management behavior, housing rental enterprises should access to the city housing rental management service platform, submit housing source information, transaction information, etc., to achieve full information supervision. In principle, the period of single rent collection shall not exceed three months, and the rent paid to the owner shall not be higher than that of the lessee. These measures are aimed at preventing the long-term rental apartment enterprises from long-term collection and short-term payment and high-income and low-cost behaviors. Previously, Beijing has put forward the requirement of matching the collection and payment cycle for the rent of light asset leasing enterprises, which has been implemented and has produced certain effects. This time, it will be promoted nationwide.

Third, the management of funds. Housing leasing enterprises should set up a capital supervision account in commercial banks. If a single rent is charged for more than three months, or a single deposit exceeds one month, the rent and deposit collected shall be included in the supervision account, and the rent shall be paid to the house owner through the supervision account, and the deposit shall be returned to the lessee. This move will prevent long-term apartment companies from misappropriating customers' rents to expand their scale. Last year, Chengdu, Nanjing, Chongqing and other cities have launched rent supervision policies for more than three months, and achieved results. This time, six ministries and commissions jointly launched a policy to gradually implement this measure in various regions.

Fourth, in charge of loans, leasing enterprises shall not carry out financial business in disguised form, shall not embed relevant contents of housing rental consumption loan into housing lease contract, shall not take advantage of lessee's credit to obtain housing rental consumption loan, and shall not induce lessee to use housing rental consumption loan in the name of rent installment and rent preference. This is aimed at the behavior of some leasing enterprises to obtain funds by luring consumers to sign rental loan contracts, which means that leasing enterprises are not allowed to engage in financial business in the future.

The agency pointed out that for the long-term rental housing market, this guidance is a correction of the extensive development in the past. This policy will force light asset leasing enterprises to standardize their operation, reduce their capital leverage ratio, slow down their business expansion speed, and focus on improving their fine and professional operation ability. In the future, they will also be forced to explore a more favorable business model for development.

In the past, a large number of enterprises lacking professional operation experience and ability entered the field of long-term apartment with the power of capital, resulting in overheated investment in the industry, which contains a lot of risks. Under the above-mentioned new regulatory requirements, the market entities of the long-term rental market will be further cleared in the future, so that enterprises really engaged in long-term rental housing operation can obtain a more stable market competition environment, which is conducive to the healthy development of the long-term rental housing market（ Editor: Li Qingyu)