Red Tape to Rent Relief: China Moves to Reinvent Urban Tenancy

Amid ongoing trade tensions across East and Southeast Asia, China has quietly introduced sweeping urban housing reforms that may reshape its rental markets for years to come. In a bold piece of policy from Premier Li Qiang, China has introduced reforms targeting urban state-owned land to take effect Sept 15, 2025. National Order No. 812 is primarily for rental markets in cities such as Beijing, Chengdu, and Chongqing, and excludes rural landowners. As China is still recovering from the 2021 Evergrande crash, it has endured a simultaneous lower income housing shortage whilst record numbers of luxury units sit empty. Vice Premier He Lifeng spoke at a video conference in May 2025, confirming that Chinese real estate is essential to economic and social development, and that China ought to acquiesce empty or unfinished real estate developments to ease the burden on overleveraged firms and convert them to government housing. Likely due to its precarious real estate market, CCP leadership has been laser focused on broader urban renewal that prioritizes affordability and livability as opposed to larger, more expensive construction projects often left unfinished. Vice Premier He closed by demanding the responsibilities of local governments, real estate companies, and financial institutions be strengthened. This legislation does just that and more.

China understands better than most that revitalizing lower income housing is a must. In addition to the CCP’s commitment to increasing government owned rental housing, it now encourages residents to rent out their homes and renovate commercial and industrial spaces into new residential properties. The legislation consists of 7 chapters and 50 articles, dictating broad reforms on the rental process, establishing regulatory oversight of rental agencies, and providing recourse when agents or rental companies do not comply. Not only that, the legislation represents a landmark shift in urban tenant rights and offers a potential model for reform in other markets.

First, tenants in China are now protected from intimidation by landlords or housing rental agencies. Lessors can no longer use violence, threats, or other illegal means to force tenants to terminate the housing lease contract or vacate the leased housing. Tenants also are now given a right to privacy and landlords must not enter living quarters without a tenants explicit consent. While similar protections exist in U.S. tenant law, China’s new system allows renters to formally track and investigate a landlord’s history of evictions or privacy related misconduct, an oversight capability rarely available to U.S. renters. 

Next, Chinese citizens are now able to enjoy the same public services as those who buy. Previously, Chinese renters in cities such as Shanghai were typically considered after those who own for enrollment, causing proliferation of inequality among residents starting as early as primary school. Due to Article 5 and 13, renters can now expect local school enrollment rights for their children, healthcare registration in their district, access to pension registration, and unemployment benefits. The U.S. has similar characteristics in that school placement is tied to housing and good school districts can make rentals pricier, however unemployment and other social benefits like Medicaid (the U.S. version of government sponsored healthcare) are usually tied jointly to an individual’s state and level of income as opposed to their city of residence. 

Another further example of such wins for tenants is that parts of a home – such as attics, basements, balconies, or garages – can no longer be rented out for residential purposes. Rooms of a home can still be rented out, but all tenants must have access to all necessary utilities such as running water, heat, and ventilation and the number of people who occupy each residential property must comply with local standards. 

While illegal units are difficult to quantify in both the U.S. and China, they are disproportionately occupied by low income people or immigrants, and it is those who will be displaced by this law. By removing a number of apartments with no kitchen or refrigeration access from the rental market, which is legal in most of the United States, there inevitably will be a short term decrease in available housing in Chinese cities. Landlords who operate illegal apartments can no longer rent to an inordinate amount of people per square foot and must make necessary changes to follow local regulations, or remove the property from the market entirely. This friction usually causes increased housing cost due to diminished supply, although since August 2021, China has introduced rent control that caps annual increases at 5%. Rent control is an often unpopular tool among economists as it stifles desire for investors to build more housing if their profits are limited. Since China’s housing shortage was partially caused by luxury overbuilding, rent control is unlikely to affect the current inclination to build lower income housing. Low income people should have more available housing once landlords are able to make necessary changes or the government acquires their property to convert into government housing. If illegal apartments are still found to be in use, a warning is issued first, and then a fine of RMB 20,000-100,000 yuan (≈ USD 2,780-13,935) shall be imposed on the unit, and a fine of RMB 2,000-10,000 yuan (≈ USD 280-1400) shall be imposed on an individual. 

Following property management companies and their employees, an employee of a housing rental brokerage agency can no longer engage multiple brokerage agencies at the same time or take on rental property in their own name. Additional articles mandate real estate employees are also personally liable for posting false or misleading information or photos, meaning an end to classic ‘bait and switch’ tactics. These all result in up to a RMB 10,000 yuan (≈ USD 1400) fine and illegal income being confiscated. Continued or extremely problematic behavior earns individuals a one-to-five year ban on all rental activities. Housing rental brokerage agencies must also submit all employee records to create a database to monitor real estate professionals and ensure they are not ‘double dipping’.

Housing rental brokerage agencies themselves must also be subject to a public database; the legislation establishes a credit evaluation system for companies and agents that is shared via the national credit system and records non-compliant or illegal behavior, then applies tiered supervision based on status.  Real estate departments must collaborate with police to record instances of violence towards tenants, educational institutions to ensure fair access, state tax administrations to validate registration of homes as rental properties, financial oversight to ensure rent and deposit funds are in third party escrow accounts and not mixed with company funds, and more to contribute to the centralized data-sharing and management platform. Oversight was previously fragmented, but now local governments will have committees dedicated to enforcing rent control, as well as providing some of the most important data regarding the effects of widespread rent control policies in statist or mixed economies.

As the U.S. moves away from providing housing for low income families, as illustrated by a requested 44% cut to Housing and Urban Development, China moves towards it. In the U.S. where close to a third of the population are renters, policies such as those enacted in China that prevent additional hidden fees, create oversight committees, and centralized databases of housing companies and agents would be a blow to predatory housing brokerages. Many in the U.S. rely on community sourced reviews and the Better Business Bureau to assess companies’ fitness and rarely ever see evaluations on the specific housing broker. Additionally, it is common for U.S. renters to undergo background and credit report checks for potential landlords to evaluate their fitness to rent, but there are no organizations that provide the same for landlords.

The most impactful recent piece of housing legislation similar to Premier Li’s would be the FARE Act spearheaded by Councilmember Chi Ossé of New York City. The act prevents brokers fees, often amounting to 10-15% of annual rent, from being tacked on to moving sums when the tenant has not requested a broker. The FARE Act is widely unpopular with landlords and rental companies who have filed a federal lawsuit and currently have no regulatory oversight over the amount charged for broker fees. In the U.S. where a full time minimum wage worker is unable to comfortably afford rent, it is essential for governments to outlaw predatory rental processes that continuously squeeze profit from lower income people. Still, the FARE Act only affects New York City. Boston remains the last major city to have tenant-paid broker fees. Reform must come from within the city of Boston as opposed to China where these reforms can be doled out from a centralized government to local governments for enforcement.

 As U.S. policymakers debate significant cuts to social welfare and housing assistance, China’s centralized reforms signal a broader trend toward state intervention in housing equity. Although such reforms come with their own risks, particularly around transparency and investor response, they highlight the potential benefits of a unified regulatory framework. As the Chinese system begins implementation this September, observers will closely watch whether these tenant protections and oversight mechanisms result in meaningful, long-term change.