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July 14, 2011

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Owners, tenants must register

PROPERTY owners and tenants must register their contracts with the city starting in October under threat of punishment for the first time, senior government officials said yesterday.

Effective October 1, new rules will start across the city as Shanghai moves to further regulate the mainstream residential leasing market. Some 30 million square meters of residential space are rented, Pang Yuan, deputy head of the Shanghai Municipal Housing Support and Building Administration Bureau, told a press conference in announcing the rules.

Under the new law, real estate agencies will be responsible for such registration if they help bridge the deals, whereas individual owners and tenants should register their activities themselves with local community affairs service centers. The registration must take place within 30 days of contract signing.

Real estate agencies failing to comply will face fines of 3,000 yuan (US$463) to 30,000 yuan if they refuse to register after receiving notice from local housing authorities. Individuals who sign the deals on their own will be charged a maximum 1,000 yuan for violations, while enterprises can be fined up to 10,000 yuan.

A maximum two-month deposit will be allowed and homeowners will not be allowed to raise rents if leases are signed for one year or less. Only one increase is allowed per year if such contracts are longer than 12 months.

Homeowners should also inform their tenants one month in advance of the lease's expiration if they don't want to renew the contract.

The new rules will cover all mainstream residential leasing agreements whether they are signed after or before October 1, officials said. (Mainstream excludes special affordable-housing programs for low-income residents.)

"Such rules have certainly indicated local housing authorities' good wishes and efforts but in my point of view, it may be better for the government to offer incentives, rather than impose fines," said Song Huiyong, research director of Shanghai Centaline Property Consultants Ltd, operator of the city's largest real estate chain by transaction value.

The local housing authority has also clarified that tenants should have a minimum per capita space of at least 5 square meters as it furthers its efforts to crack down on group renting.

Owners are not allowed to rent their properties to those who cannot provide identity cards or business licences.


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