The Rental Agreement

What to expect when signing a lease agreement if renting a property in China...

Properties are generally rented on one-year leases, but there are exceptions and some landlords are open to negotiation about the length of tenancy.

The lease contract is normally written in Chinese only. It is possible to request an English translation, but in case of disputes, the Chinese version is the legally binding document. The lease agreement is made either between the landlord and the individual, or between the landlord and the employer. The details of the contract should cover the monthly rent and terms of payment, the length of the lease, the terms and value of any deposit paid. It should also cover other items such as any maintenance, services and bills included, as well as any restrictions, such as whether pets are allowed. Any conditions such as a mid-contract notice period from either party (sometimes referred to as a "diplomatic clause") should also be included. An inventory of items in the property and its general condition may be issued at the start of the agreement, and this should be checked and approved by the tenant.

Monthly rental rates are sometimes negotiable with a landlord. Some landlords ask for 12 monthly payments either by cash or by bank deposit, while others may request that the rent be paid in advance in quarterly instalments. In some parts of the country, six-month leases are more common, with the full rent paid in advance. There is also the estate agent's fee if the tenant has used their services.

Deposits

A refundable security deposit is normally required, which should be returned within 30 days of the tenant moving out of the property, subject to a damage inspection. One or two month's rent is the standard deposit amount, although some landlords require more. Security deposits are paid back on the final day of a lease contract. If a contract is broken before the end of the lease, the owner will keep the security deposit.If a serious dispute over any part of the contract occurs and cannot be settled privately, it is possible to take the case to the China International Economic And Trade Arbitration Commission.

Other liabilities

Once the lease is signed, landlords are officially required to register the contract with local authorities, who then charge a stamp duty of 0.1 percent of the rent (the cost of which is split between landlord and tenant). Foreigners who have accommodation as part of their employment package also need their landlord to supply a monthly receipt (known as a fapiao) to the company. A government tax of five percent of the monthly rent is charged on submission of each fapiao. Consequently, some landlords are keen to avoid having to do this, or charge a higher rent to cover the cost. This receipt if required for Chinese corporate bookkeeping and for tax deductions.

As well as the taxes mentioned above, tenants may also have to pay utility bills and apartment service charges, unless these have been confirmed as included in the rent. The tenant must register a new address with the local Public Security Bureau (PSB). Buildings insurance should be covered by the landlord, but contents insurance is normally the tenant's responsibility.