Throughout my years in China I have rented 6 different apartments. Here are 5 tips to help you when renting an apartment.
Note – This article is written based on my own experience in Guangdong province. You may find things are different in other cities. For example the deposit amount and agency commission might not be 2 months and 50% of 1 month as I mention here.
1. Know the law
Legally all landlords in China are required to register their rental properties with the government (and pay a rental tax of course). As with everything else in China what is legally required is not what is commonly practiced. Most landlords don’t want to pay the rental tax. If they do pay for this they will pass the cost on to you by charging higher rent. The exact cost depends on which city you live in and the size of the apartment. Generally it’s a few hundred yuan per month.
When Chinese landlords rent to Chinese tenants the apartment will rarely be registered and this rarely causes any problems. However when renting to a foreigner this can get more complicated. Most Chinese landlords don’t know about this problem if they have never rented to a foreigner before and it often causes misunderstandings. Most property agents who are not used to working with foreigners don’t know about this either (or they are just interested in getting a deal made and getting the commission, they don’t care what happens after).
The complication is caused by the fact that as a foreigner you are required to register your residence with the local police station within 72 hours (hotels will do this on your behalf, that’s why it takes so long to check-in). This registration paper is required for doing many things in China such as applying for a work visa (residence permit) or a drivers license. As soon as you do this registration the police will immediately look for you and your landlord if the apartment is not a registered rental apartment. Trouble can be expected for both of you from this point forward.
If you are in China on a tourist or business visa you may be tempted to skip registering your residence but this is not recommended. Sometimes the police will come do random inspections and you could get yourself in trouble if you are living somewhere without registering. Your landlord will also likely have to pay big fines or a bribe to someone if their apartment is not registered as a rental property. Of course they will also have to register it after getting caught and they will want to raise the rent to cover this cost. This happened to me in the first apartment I lived in. I refused to pay extra rent and the landlord refused to pay to register the apartment at his own expense. My argument was that it was a legal requirement and completely his responsibility. His argument was that I never told him I needed it when we signed the contract. In the end I told him that I had to move out if he could not legally rent the apartment to me at the price stated in the contract. He tried to keep the deposit but I told him that he was the one ending the contract, not me. We were both quite stubborn about it and I sat there for 2-3 hours refusing to leave until he returned my deposit. In the end he finally returned my deposit after I suggested we call the police. The police were already on his case for renting an unregistered apartment and he certainly didn’t want to get them further involved.
There is one way to register your residence if you are living in an apartment that is not a registered rental apartment. If your landlord is your “friend” and you are “not paying rent” then the apartment is not required to be registered as a rental. Just make sure that you tick the right box on the residence registration form to say that you are living in the home of a friend or relative instead of renting. You will also need to write the name and ID card number of your friend who is letting you stay in their apartment for free. If you do decide to go this way keep in mind that you won’t be able to seek legal help if your landlord/friend breaks your rental agreement.
Problems can be avoided if both you and your new landlord understand these issues before signing a contract.
2. Find out if you need a fapiao
If your school or employer is paying your rent then you will likely need a Chinese tax invoice (发票, Fā piào). Your landlord will also need to register the apartment as a rental property as described above in order to get a fapiao but not the other way around. You can register an apartment as a rental property and pay rental tax and not issue a fapiao but you can’t issue a fapiao without registering the apartment as a rental property. The rental tax and fapiao tax (VAT) are different kinds of taxes. Both the rental property registration and the fapiao have their own associated taxation costs which will be passed on to you through higher rent. You can expect to pay around 500 yuan extra per month on a 4,000-5,000 per month apartment for these two taxes if you need a fapiao.
Check with your employer whether you can give them other fapiaos to cover your rent. For example meals, travel, petrol, grocery shopping, etc can often be used instead of a fapiao from your landlord. If you do need a fapiao from your landlord then you can often save costs by only getting the fapiao for the amount covered by your employer. For example if your employer covers up to 4,000 yuan per month but your rent is 5,000 yuan per month then tell your landlord that you only need a 4,000 yuan fapiao which is cheaper than a 5,000 yuan fapiao.
3. Know what you are expected to pay
Standard agency fee is 50% of 1 month rent but like almost everything else in China this is negotiable. I have never paid the full 50%, I have even paid as little as 20%. Most property agents will be happy to do a a private deal off the books from their company for 20%. They will get less than this anyway if the commission goes to their company. This of course is very unethical but nevertheless it’s quite popular. If you want to be even more unethical you can often get in contact with the landlord directly and bypass the agent completely. This is not recommended because those agents work hard (at least in my case they work hard because I usually look at no less than 50 apartments with multiple agents before deciding) and they deserve to be paid.
You can try to find an apartment without an agent but this is very difficult. Although there are many Chinese websites where landlords can post their apartments very few actually do this. Most available apartments can only be found through agents. I wish more landlords would post their rentals themselves, this can save them money too (agencies also take 50% of 1 month rent from the landlord).
Standard deposit is 2 months rent and rent is always paid for the following month. That means you usually need to pay 3.5 months rent when you sign the contract (2 months deposit, first month rent, and agent’s commission). The 2 month deposit is not usually negotiable, especially if the apartment is furnished. For an unfurnished apartment you can often argue that only 1 month is necessary. Don’t push this too much though otherwise the landlord might worry that you can’t afford to pay the rent on time if you can’t afford 2 months deposit. It’s better to pay the full deposit and focus your negotiating on the actual rent.
These are some advanced tips for finding a great deal. If your company is paying for your apartment or you don’t want to waste time finding a great deal then skip this section.
As a foreigner you have a big advantage despite the above mentioned complications. Most Chinese landlords love to rent to foreigners and will lower their price in order to do this. You will even notice many ads specifically say “only foreigners, Hong Kong, and Macau tenants” especially in higher end apartments. If a landlord owns a 2,000,0000 yuan 3 bedroom apartment do you think they would rather rent it to a single foreigner or a Chinese family? Often landlords care more about protecting their investment than they do about the rent. Foreigners have a reputation of keeping apartments clean and paying their rent on time. Take advantage of this.
If you have a good property agent they will help you play this up and convince the landlord to accept a lower than average rent. I have always paid well below the market average for all of my apartments even though I am not especially clean and I often don’t pay my rent on time. It’s about reputation more than anything else. This works best if you have white skin and come from a good country. I don’t mean to sound racist, that’s just the way it is.
After looking at a few apartments you should make some low-ball offers. At first the agent will say that price is impossible and be reluctant to even make such an offer. Tell them to call the landlord and say they have a foreigner who is very interested but can only pay whatever your offer is. You might be surprised, some landlords will accept the offer, especially if the apartment has been vacant for a long time. Even if they don’t accept the offer by doing this you are letting the agent know that you will only rent an apartment if they get you a great deal. Once they realize this they will work hard to find one. They will stop wasting your time showing you apartments that are not nice or overpriced and they will call you immediately once a new apartment comes on the market that they think is a great deal or if they know the landlord is eager to rent the apartment quickly. These property agencies are crowded with way too many agents and they are all desperate for your business. Make them work hard for their money.
5. Sign a good rental contract
Now that you and your landlord understand clearly what is needed and expected from each side and you have negotiated a good price the final step is to have a good contract. Never use a contract provided by the agency or the landlord and never sign any contract that you don’t understand.
You should always make your own contract and print a few copies of it when you go to meet the landlord to sign the contract. It should be in both Chinese and English. The English part is just for reference so you can understand it because contracts in English are not valid under Chinese law. Be prepared to walk away from the deal if they insist on not using your contract.
I would like to share my own contract with you which was originally based on a poorly translated Chinese contract. Over the years I have made changes to improve it (for me, not the landlord) and make things more clear (such as who needs to pay for repairs). The English is not great but it’s understandable and it’s the Chinese that is more important.
Download a copy of my contract here. The format is Microsoft word, you can edit and improve it to suit your own requirements. I provide this as an example only, I take no responsibility for the contents of it. Use it at your own risk.
Good luck with your apartment hunting. If you have any comments or your own tips please leave them below.