Debate: House rents

Shen Bin

Do not increase tenants' burden

The Ministry of Housing and Urban-Rural Development issued a regulation banning group rentals three months ago, but they are still prevalent in cities like Beijing and Shanghai.

Beijing banned group rentals early this year, and Shanghai issued a draft regulation on house rentals in April. According to the Shanghai draft, "originally designed sitting rooms should not be divided and rented out" and "the average living space for one person should not be less than 5 square meters."

That means the practice of dividing a single room into several cubicles, for long a popular practice in Shanghai and other cities, will become illegal. In fact, in the past several years, Shanghai has tried to stop that practice more than once only to meet with failure, because the authorities did not have regulations to back their action. Earlier, law enforcers did not have the legal basis to tell people not to divide rooms. But now, the draft regulation has granted housing department officials that much-needed power.

Yet I do not think this is the proper time to prohibit such practices, because the authorities have not succeeded in controlling rising rents or housing prices. According to the latest data, the average monthly income of Shanghai residents is about 3,800 yuan ($584.4), but the rent for the cheapest apartments, for instance, an apartment smaller than 50 sq m, is 2,100 yuan a month. That means even a middle-income person has to spend more than half his monthly income just to rent a place.

For people earning still less, the only choice is to share a room with others. That's why I think the practice of dividing houses is a spontaneous and practical arrangement and the rational choice in the circumstances for tenants.

Of course, such arrangements always come with problems. This one is no exception. Living standards fall drastically if too many people are forced to live under one roof and other dangers like fire or gas leak increase greatly. Only one week ago, a partitioned apartment in Wangjing community of Beijing, which served as a dormitory for more than 20 students, caught fire and "was burnt to ashes".

Therefore, I support regulating the practice of partitioning houses. The problem is no one knows what effects such a regulation will have. But it would be useless if it just prohibits the practice of partitioning houses without controlling rising rents.

History teaches us a very important lesson. In the 1920s, rising rents forced many Shanghai residents to crowd into one apartment. Records show that as many as 10 families used to live in one apartment. The then government issued a regulation in 1931 prohibiting the renting out of one house to more than three families. But that order soon became a mere scrap of paper because the government failed to control rising house prices and rents.

The failure of the government in 1931 should prompt today's officials to take poor people's needs into consideration while making decisions. If they say it is "illegal" to live in a cubicle, then it is their duty to control rents so that the poor, too, could rent at least a small room.

In January, the Shanghai mayor promised that the municipal government would build 15 million sq m, or 220,000 indemnificatory apartments, for the needy. About 170,000 of those, he said, would be completed this year. That's a welcome move as it will offer affordable housing for the poor.

But since such apartments are only on paper now, I think it is too early to force people to move out of their cubicles. If the authorities force them to do so, they would be only pushing the market into deeper chaos and rendering people homeless. The government can prohibit partitioning of houses only after making affordable houses available, not before that.

Besides prohibitions, the Shanghai draft also says that all house rental contracts should be registered with local administrations. Surely, this will help better regulate the market but then the registration fee, or 5 percent of the rent, would be added to the cost. That would mean imposing a heavier burden on residents, instead of helping them.

In other words, the government is welcome to regulate the housing rental market, but the authorities should take residents' rights and interests into consideration before implementing the regulation. Without offering enough affordable houses for rent, the authorities should not ban people from living in cubicles, no matter how hazardous they are because the tenants have no choice.

The author is a Shanghai-based lawyer.

(China Daily 05/03/2011 page9)