The Shanghai branch of the Jiu San Society, a non-Communist party, has put forward a proposal on rented housing to the municipal government, with the aim of building up a healthy house rental market creating affordable housing for low-and-middle income families.

Mi Zhengming, a member of the house renting system research team in Jiu San Society, said the proposal is designed to encourage developers to build more affordable housing to be made available for rent by families that cannot afford to buy property of their own.

Insiders hold that the development of the current house renting market in Shanghai lags behind that of the house purchasing market.

They said the proposal aims to promote the growth of the house rental market whilst simultaneously helping it become more mature.

According to the latest statistics from the Shanghai Municipal Housing, Land and Resources Administration, the floor area of houses for renting only accounts for 12.5 per cent of all the housing resources in the city.

In developed countries, the percentage of houses for rent is much higher - ranging from 40 to 60 per cent of their total housing resources.

Successful overseas practice shows that property developers rather than local governments should be the major players in building the homes for renting.

Zhang Hongming, a senior researcher from the Shanghai Academy of Social Sciences, noted that local governments in the United States only provide 5 per cent of all the capital invested in constructing low-rent homes for the poor, the rest comes from developers.

Zhang added that instead of offering cash, local governments in the United States reward the developers with preferential treatment.

A property developer, surnamed Lu, said, "We are interested in developing houses for renting, however, only on the condition that the local government offers us supporting policies. Otherwise the period for us to see a return on our investment will be too long. We just can't work that way."

Experts believe that lowering the land lease expense and offering preferential tax policies will cut costs for the developers, which, in turn, will bring more developers onto the scene.

Lu pointed out that usually developers constructing houses for sale should pay the land lease in one lump sum. This takes up a lot of cash as pre-investment costs.

Lu said, "When developing the houses for renting, especially those targeted at low-income families, we hope that the local government will allow us to pay the land lease in instalments."

Industrial analysts noted that the Jiu San Society's proposal is in line with the local government's "20 million" plan and its existing low-rent housing system.

At the start of this year, the city government unveiled a plan to construct 20 million square metres worth of affordable housing.

According to the plan, all the houses would be priced below 3,500 yuan (US$432) per square metre, and are to be restricted to residents relocated by urban expansion projects and low-income families.

The proposal also suggests that the municipality allocate a proportion of the 20 million square metres to the low-rent system

The current low-rent housing system is designed to provide accommodation for poor urban residents with a floor space of below 9 square metres per capita, with a monthly income of less than 290 yuan (US$36). Their rent is currently 1 yuan per square metre.

The proposal indicates that the low-rent housing system should include more families or individuals that are not that poor and can afford higher rents.

The local government is considering the proposal.

Source: China Daily