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The introduction of the Regulations on Housing Rental Sector
Time：2025/09/01 BJT
In 2025, China's housing rental market is undergoing profound adjustments. On one hand, persistently declining rents, supply and demand contradictions are prominent, and frequent market irregularities urgently require institutional regulation. On the other hand, urbanization continues to advance, with new urban residents and young people maintaining rigid housing demands. The accelerated entry of indemnificatory rental housing into the market has propelled the industry from "unregulated growth" to "high-quality development". Against this backdrop, the State Council unveiled the "Regulations On Housing Rental Sector" (hereinafter referred to as the "Regulations") on July 21,2025, which will go into effect on September 15. As China's first administrative regulation specifically regulating housing rentals, these regulations not only address market pain points but also inject strong momentum into stabilizing and efficiently developing the rental market. This measure that comes at an opportune moment.
The housing rental market in 2025 is witnessing a complex landscape characterized by "demand pressure, oversupply, declining rents, and structural differentiation." Data indicates that the average residential rent in China's 50 key cities fell by 1.37% cumulatively in the first half of 2025, with June's year-on-year decline reaching 3.71%. Core areas in first-tier cities like Beijing and Shanghai saw rent drops exceeding 10%, while non-core regions experienced even steeper declines of up to 15%1. This downward trend reflects profound shifts in supply-demand dynamics: On one hand, economic adjustments and employment market fluctuations have reduced rental demand, prompting many tenants to vacate or co-lease properties due to unstable income projections. On the other hand, the concentrated launch of indemnificatory rental housing—planned for 2 million new units nationwide in 2025—combined with existing commodity housing transitioning from sales to rentals, has kept market supply at elevated levels.
The contradictions in the housing market structure have become more pronounced. Currently, China's rental population has reached nearly 40 million, with tenants aged 35 and above accounting for 35% of the total. Mainstream home buyers are returning to the rental market, driving demand for improved living conditions—— Over 40% of renters are willing to increase their budget for "higher-quality basic renovations," while nearly 20% are open to renting for over a decade2. However, over 90% of available properties are privately rented, with more than 50% being older than 10 years, failing to meet quality demands. Meanwhile, institutional housing accounts for less than 5%, and centralized long-term rental apartments show only 29% tenant renewal rates, highlighting a severe lack of professional and market-oriented supply.
Volatility in the housing rental market has been further amplified by rampant irregularities including fake listings, "collecting long-term rent while paying landlords short-term," deposit deductions, and violent evictions. In Beijing, a landlord reduced the rent for an Xicheng District property from 9,000 yuan to 6,000 yuan monthly yet struggled to find tenants. Meanwhile, victims of information asymmetry frequently fall victim to "photo-fabricated listings." While competition between traditional agencies and new platforms intensifies, the lack of coordinated mechanisms persists. Despite smart rental platforms achieving 75% penetration, issues like data manipulation and service gaps remain. These contradictions highlight the urgent need for top-level design to regulate the housing rental market, balance supply and demand, and protect tenants' rights.
Officials from the Ministry of Justice and the Ministry of Housing and Urban-Rural Development emphasized during a press briefing that the newly enacted Regulations are designed to target critical challenges in housing rental market development while enhancing institutional responsiveness and effectiveness. To address the complex market dynamics projected for 2025, the regulations implement coordinated measures across three dimensions: supply-side optimization, demand-side regulation, and market oversight. This comprehensive framework establishes a legal foundation for stabilizing the market through standardized industry practices, tenant rights protection, and strengthened market supervision, thereby providing a robust legal bedrock for market recovery.
To address structural imbalances in the housing supply, the Regulation innovatively combines "revitalizing housing stock" with "cultivating market institutions". On one hand, it explicitly states that the state encourages households to convert their properties into rental units and supports enterprises in revitalizing old factories, commercial office spaces, and self-held commodity housing for leasing purposes, utilizing methods like converting non-residential properties into rental units or repurposing government-owned assets through acquisition and subleasing to absorb housing stock. On the other hand, it advocates cultivating market-oriented, professional housing rental companies, requiring them to possess proprietary capital, staff, and management capabilities commensurate with their operational scale, while imposing entrenched regulations on property information authenticity, fund supervision, and record-keeping. This dual-engine approach not only alleviates short-term supply pressures but also lays the foundation for long-term institutional development.
To address irregularities in the leasing and brokerage sectors, the Regulation implements comprehensive oversight throughout the entire process. Housing rental companies, requires publishing authentic, accurate, and complete property listings while prohibiting false or misleading information. Those engaged in subletting operations must "establish and publicly disclose a housing rental fund supervision account" to manage payments through the account, preventing risks of "collecting long-term rent while paying landlords short-term" at the source. For brokerage agencies, regulations mandate verifying clients' identity information and property ownership details before listing, conducting on-site inspections, and preparing housing condition reports, along with clearly pricing service charges. Additionally, the Regulation innovatively incorporates lessors whose subletting meets scale standards into corporate supervision, closing regulatory loopholes for "middleman landlords". These measures directly address industry pain points, laying the foundation for risk control and standardized development in the housing rental market.
Centered on the "right to housing security," the Regulation establishes a comprehensive tenant protection framework. Regarding residential safety, it explicitly prohibits renting out non-living spaces like kitchens, bathrooms, and balconies separately, while requiring rental properties to meet mandatory building and fire safety standards. In terms of contractual rights, the Regulation mandates that landlords and tenants must sign contracts under real names with official registration, specifying deposit amounts, refund timelines, and deduction scenarios, with no unjustified deductions allowed. To ensure stable tenancy relationships, it bans landlords from using violence or threats to force tenants to vacate, and requires reasonable relocation periods when terminating contracts. Professor Chang Peng'ao from Peking University Law School commented that these provisions underscore its intrinsic focus on public welfare, providing tenants with full-chain protection from housing safety to contractual stability3.
Another breakthrough of the Regulations lies in establishing a modern regulatory system characterized by the rule of law, standardization, and intelligence, providing institutional safeguards for efficient market development. As officials from the Ministry of Justice and the Ministry of Housing and Urban-Rural Development stated, the Regulations accurately define legislative positioning, emphasize administrative management measures, and properly handle relationships with civil legal systems, marking a leap from "campaign-style rectification" to "regularized governance."
Article 29 of the Regulations explicitly states that the people's governments at the level of a city divided into districts shall establish a housing rental monitoring mechanism to regularly publish information on rent levels for different regions and types of housing." This mechanism fills a national regulatory gap in rental oversight. Zhao Ran, President of the Industry Council for China Rental Apartment, noted that it provides institutional safeguards to curb rent inflation and guide market expectations4, contributing to the reshaping of a data-driven governance framework for rental markets. In the first half of 2025, the rental-to-income ratio in 50 cities dropped to 16.4%, a decrease of 1.4 percentage points compared to 2024, demonstrating the monitoring mechanism's effectiveness in stabilizing market expectations.
The Regulation introduces a dual-engine mechanism combining credit supervision with industry self-regulation for the first time. It mandates that governments implement comprehensive oversight of enterprises and practitioners through credit grading and categorized supervision, while requiring industry associations to strengthen self-regulatory systems. In pilot cities like Shen Zhen and Shanghai, leasing companies' credit ratings are directly linked to project financing and tax incentives, with non-compliant enterprises being restricted from participating in indemnificatory rental housing construction. This government-guided and market-driven model not only reduces administrative costs but also enhances regulatory precision.
The Regulations establish a comprehensive regulatory framework where the State Council's Ministry of Housing and Urban-Rural Development oversee nationwide oversight, local real estate administrations lead implementation, while market supervision and public security departments collaborate to create a "comprehensive vertical and horizontal" regulatory network. Additionally, the regulations mandate the formulation and publication of model contracts for housing rentals and brokerage services, along with the establishment of a "Housing Rental Management Service Platform" to facilitate information sharing. These provisions provide a clear legal basis for law enforcement operations.
The introduction of the Housing Rental Regulations not only addresses current market issues but also marks a crucial step in establishing a housing system of both renting and purchasing. Professor Chang Peng‘ao noted that as China's first administrative regulation specifically regulating housing rentals, the Regulations "further clarify the rights and obligations of lessors and lessees based on the Civil Code, providing legal support for equal rights between renters and buyers." In the long term, these regulations will drive the housing rental market's transformation from being an "appendage" to becoming an independent sector.
At this pivotal juncture of the real estate market's profound adjustment in 2025, the introduction of the Regulations comes at an opportune time. It serves as both a "stabilizer" for the rental market during downturns and a "preventive measure" to preempt risks in regulatory standardization. Furthermore, it charts the course for high-quality industry development. With subsequent supporting policies being implemented, the housing rental market will gradually achieve a new paradigm characterized by "balanced supply-demand, regulated market participants, rights protection, and efficient supervision." This will provide solid support for new urban residents and young people to have an access to adequate housing, while laying the foundation for the long-term healthy development of China's real estate market.
1. Beijing China Index Academy, Summary and Outlook of China's Housing Rental Market in the First Half of 2025
2. 《 2025 China Urban Long-term Rental Market Development Blue Book》
3. rofessor Chang Peng’ao, Peking University School of Law, The significance of theRegulations On Housing Rental Sector in this era
4. Beijing China Index Academy, Summary and Outlook of China's Housing Rental Market in the First Half of 2025