The World of Chinese - - Contents - BY HATTY LIU

A long-ig­nored facet of the hous­ing boom, rent­ing is be­com­ing pop­u­lar with ur­ban­ites un­able to buy. But with sky­rock­et­ing prices, a car­cino­genic dry­wall scan­dal, and shady agents run­ning amok, it's hard for China's ten­ants to find a place to call home

When a ten­ant sued rental agency Zi­room in Au­gust, blam­ing the high lev­els of formalde­hyde in one of its Hangzhou apart­ments for her hus­band’s death from leukemia, Xue Jing was one of many who saw the news and pan­icked.

“I bought a DIY test­ing kit, and it told me there were ab­nor­mal formalde­hyde lev­els in my bed­room, so I bor­rowed a me­ter and got a read­ing of 0.23 mil­ligrams per cu­bic me­ter,” Xue told TWOC, quot­ing a fig­ure more than twice the na­tional max­i­mum. The car­cino­gen, com­monly found in var­nishes and paint used in ren­o­va­tions and fur­ni­ture by com­pa­nies like Zi­room, is capped at 0.1 mil­ligrams per cu­bic me­ter by Chi­nese law. “I didn’t even know this could be a prob­lem; the agent never said any­thing be­fore I moved in.”

For those in the know, it has long been an open se­cret that harm­ful chem­i­cals are present in apart­ments across China—and that this is only the tip of a toxic ice­berg. “Ac­tu­ally, all ren­tals have formalde­hyde lev­els ex­ceed­ing the max­i­mum; Zi­room is just the big­gest of­fender, and the un­luck­i­est,” one source within Zi­room’s com­peti­tor, Xiangyu Apart­ments, told TWOC on the con­di­tion of anonymity.

Once a ne­glected rung on China’s heated prop­erty lad­der, the coun­try’s rental mar­ket got a push in late 2017 when Pres­i­dent Xi Jin­ping called for homes to be built for “liv­ing in,” rather than pur­chased for spec­u­la­tion. How­ever, as cities and state-owned banks re­sponded by rolling out pref­er­en­tial land-use and lend­ing poli­cies, and de­vel­op­ers rush to cash in, the rental sec­tor seems to have not only in­her­ited the hous­ing boom’s

Your apart­ment may be poi­son­ing you— a TWOC in­ves­ti­ga­tion f inds a rental busi­ness rid­dled with scams, run­away prices, and toxic chem­i­cals in the wall­s房子是租的,生活是自己的

in­vest­ment—but also its is­sues with spec­u­la­tion, poor reg­u­la­tion, and cor­rup­tion.

Aside from the so-called “formalde­hyde-gate,” this scan­dal­rid­den year saw Zi­room cen­sured again in Septem­ber for evad­ing re­spon­si­bil­ity for a hid­den cam­era found in one of its Bei­jing apart­ments. Mean­while, chief com­peti­tor Danke Apart­ments was in­ves­ti­gated in May for a “pay-by-month” scheme that re­sulted in ten­ants get­ting signed up for loans with­out their knowl­edge, which they re­paid in the be­lief that they were sim­ply mak­ing rent each month (Danke also paid land­lords monthly, mean­ing that the agency con­trolled the equiv­a­lent of a year’s rent in loans with which to ex­pand their busi­ness).

The same prac­tice her­alded the Oc­to­ber bank­ruptcy of Shang­haibased Yu­jian Apart­ments, which crum­bled after tak­ing on too much debt ac­quir­ing rental prop­er­ties from home­own­ers, leav­ing land­lords with un­paid rent and ten­ants po­ten­tially still on the hook for the loans in their name.

All this comes along­side grow­ing anx­i­ety that rents have sim­ply in­creased too much, and show no sign of stop­ping in spite of the bla­tant dis­re­gard to ten­ants’ credit, safety, or health. Among first and sec­ondtier cities, Chengdu and Shen­zhen led the price surge, with the av­er­age cost of ren­tals in­creas­ing 31 and 30 per­cent, re­spec­tively, since last year; in parts of Bei­jing, rent jumped 10 per­cent just be­tween June and July this year. “Rent prices see as­tro­nom­i­cal in­crease; ten­ants pay with their lives!” shouted the sum­mer’s head­lines. “Pay the high­est price and breathe the most toxic chem­i­cals!”

In Au­gust, a Bei­jing home­owner re­vealed that an apart­ment he planned to rent out for 7,500 RMB per month was even­tu­ally listed at 10,800 RMB per month, after Zi­room and Danke tried to “out­bid” each other for the right to lease the unit. More mys­te­ri­ously, Hu Jinghui, then vice-ceo of real es­tate agency 5I5J, ac­cused com­peti­tors of driv­ing up rent prices and called for gov­ern­ment reg­u­la­tion—then abruptly re­signed the next day, claim­ing pres­sure from Zi­room’s par­ent com­pany Lian­jia.

For ten­ants, it’s a de­press­ing cy­cle of shady bar­gains, high fees, and not know­ing where to turn to help. “All that the agent gave me were green turnip plants to ‘suck up the chem­i­cals,’” says Xue. “It makes me feel very help­less.”


of Chu Min’s room­mates were still in their rooms when the de­mo­li­tion crew came one early morn­ing in Septem­ber.

“I saw a plas­tic card be­ing slipped in­side our door, break­ing it open. A mem­ber of the res­i­den­tial com­mit­tee came in, fol­lowed by po­lice­men, and a crowd of work­ers, who said they’ve come to tear down [il­le­gal] apart­ment sub­di­vi­sions,” he says. “Some of my room­mates, who hadn’t gone to work yet, got smoth­ered in fall­ing dust as their walls were knocked down.”

For those caught up in the sum­mer’s scan­dals, it may be hard to imag­ine that “branded apart­ments” (品牌公寓) such as Zi­room’s were once touted as a so­lu­tion to an abu­sive in­dus­try where ex­pe­ri­ences like Chu’s were the norm. A Us-ed­u­cated “over­seas re­turnee” with no prior ex­pe­ri­ence rent­ing in China, Chu left his first apart­ment in Bei­jing be­cause his agent pres­sured him to pay rent ahead of its due date, and moved into what he be­lieved was a fourbed­room loft. “It got sub­di­vided into nine bed­rooms. I’d been com­pletely scammed.”

Chu had fallen for a clas­sic bai­tand-switch by “shady agents” (黑中介), a term for un­li­censed, fly-by-night op­er­a­tions that typ­i­cally pose as ten­ants to ob­tain apart­ments from home­own­ers or other agen­cies, make mod­i­fi­ca­tions to the unit, and sub­lease it, of­ten with var­i­ous il­le­gal fees tacked on. “In re­al­ity, all agents sub­di­vide apart­ments so they can rent them out for more money,” Chu says,

“and if I want to move out, they’ll say I broke the lease and for­feit my de­posit. It’s also not clear if I’d still be on the hook for the loan they took out for me.”

Other un­der­hand ploys in­volve agents de­lay­ing re­pairs, cut­ting off util­i­ties, or claim­ing that the unit will be de­mol­ished or re­pos­sessed by the owner; ten­ants are then of­fered a less at­trac­tive apart­ment, and for­feit their de­posits or even their rent when they (pre­dictably) refuse. “Then, once they’ve got­ten rid of the ten­ant, they’ll re­peat the process with an­other,” says Chu, call­ing the prac­tice “apart­ment laun­der­ing.” When prob­lems arise, un­li­censed agents also sim­ply dis­ap­pear. Their scams are dif­fi­cult to pros­e­cute be­cause they are con­sid­ered “in­di­vid­ual sub­let­ters” rather than cor­po­rate par­ties un­der a lease.

Un­scrupu­lous bro­kers have been a fea­ture of China’s real es­tate his­tory since at least the eighth cen­tury— when they were called yaren (牙人) and banned from the cap­i­tal—but the mod­ern cri­sis is re­lated to the build­ing boom that be­gan with the com­mer­cial­iza­tion of China’s hous­ing poli­cies in 1994. By 1998, the State Coun­cil had for­mally abol­ished the hous­ing dis­tri­bu­tion sys­tem, and many cities be­gan to de­velop their land into new hous­ing projects to boost their GDP and ab­sorb the in­flow of in­dus­try and mi­grant pop­u­la­tions.

It wasn’t long be­fore col­lec­tivism had swung in fa­vor of a cul­tural ob­ses­sion with home­own­er­ship, fu­eled by an econ­omy that of­fered few other sure­fire in­vest­ments or so­cial safety nets. This is es­pe­cially true in first­tier cities: home-own­er­ship is usu­ally a pre­req­ui­site for ob­tain­ing a lo­cal house­hold reg­is­tra­tion (hukou), as well as other so­cial re­sources, such as de­sir­able schools. Pub­lic hous­ing is also al­most in­ex­is­tent—in­stead, al­most all new devel­op­ments are for profit, con­tribut­ing to run­away price in­fla­tion.

There is no of­fi­cial study for the va­cancy rates of Chi­nese apart­ments—that is, the per­cent­age of pur­chased prop­er­ties that are nei­ther oc­cu­pied nor rented out—though most un­of­fi­cial stud­ies since 2013 have put the fig­ure be­tween 20 to 30 per­cent. For ab­sen­tee land­lords, agen­cies play a cru­cial role in find­ing ten­ants and look­ing after their spare in­vest­ment prop­er­ties. “I’m un­able to go deal with the ten­ants my­self, but with an agent, I ba­si­cally don’t have to worry,” said Bei­jing home­owner Mr. Feng, who has al­ready moved back to Shenyang, but has no plans on sell­ing.

China lags in pro­vid­ing le­gal pro­tec­tion for ei­ther ten­ants or land­lords; nor are there au­thor­i­ties such as rental boards that deal specif­i­cally with rental prop­er­ties and leases. The obli­ga­tions of the ren­ter, agent, and land­lord to re­spect their lease are broadly out­lined un­der the PRC’S Con­tract Law. How­ever, no city or prov­ince has com­pre­hen­sively ad­dressed mat­ters such as who is legally en­ti­tled to lease or sub­lease an apart­ment, what fees they are al­lowed to col­lect, and the max­i­mum by which the prices can in­crease by year.

In a sell­ers’ mar­ket, this makes renters feel com­pelled to pay what­ever they are charged, or move out and cut their losses if they’re dis­sat­is­fied, rather than face the rig­ma­role of a civil ac­tion whose ver­dict is un­likely to be en­forced. Re­cent grad­u­ates, with lit­tle money or le­gal know-how, are es­pe­cially vul­ner­a­ble to preda­tory agents and too-good-to-be-true deals; China’s lack of a con­sumer credit sys­tem means that rent is usu­ally paid in three-month in­stall­ments or more. Added with the equiv­a­lent of at least a month’s rent, each, in agent fees and de­posit, it amounts to a min­i­mum up­front pay­ment equal to five months’ rent be­fore the ten­ant even moves in, not count­ing other mis­cel­la­neous fees that an un­li­censed agent may charge.

“I’ve looked at bet­ter apart­ments, with [more es­tab­lished agen­cies such as] 5I5J, but they ask for two months’ de­posit plus three months’ rent, which is more than I can af­ford,” says Chu. “Small agen­cies are my only other op­tion.”

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