Mainland banks in joint bid to boost home rental loans for needy residents
Disgruntled Shenzhen residents, who have been squeezed out of the city's runaway property market or are constantly living at the mercy of unscrupulous landlords, may have won for themselves a "consolation prize".
Major banks have been trumpeting home rental loans, ostensibly to help those still stuck at the bottom of the housing ladder, at least to enable them to partially fulfil their dreams and move on, or shelter themselves from property owners raising rentals on a whim.
Li Tuo recently took out a 260,000-yuan (,401.4 )loan for his family of four to move out of their 50-square-meter flat into a bigger four-bedroom apartment and save rental costs over the next three years.
House rental loans have grown popular on the Chinese mainland with property prices showing no signs of a drastic downturn despite intense government efforts to cool the red-hot sector.
Akin to traditional housing loans, once a home rental loan is approved, the bank will pay, on behalf of the tenant, all the rents in advance to the property owner over a specified period, while the borrower only needs to make monthly repayments.
China Construction Bank (CCB) — one of the nation's "Big Four" lenders — launched the product in Shenzhen in November last year in cooperation with developers, including Country Garden and Galaxy Holding who, at the same time, released 5,481 apartments for rent to tenants who have secured such loans.
Li, 32, is the first borrower and most of the flats on offer have been leased so far.
In line with the authorities' current policy of prodding residents to rent instead of buying apartments, various banks in Guangzhou, Xiamen and other mainland cities have thrown their weight behind the move by offering home rental loans since last November.
The new product has come a long way in helping to relieve the housing woes of many and drive growth in the rental market.
Some industry experts, however, have reservations, warning of a loophole that could fuel a new round of speculation, and calling for tighter market curbs.
In Li's case, housing rentals in his neighborhood average between 8,000 and 10,000 yuan a month for apartments of the same size. Using the loan, the bank pays the owner a full three years in rent, while Li enjoys a sizeable discount by forking out 7,000 yuan monthly, including interest, and gets himself protected from any untoward rental increases in future, as well as unpredictable economic fluctuations.
Besides saving money, Li relishes another plus — stability. A leasing contract for three years means there's no need for him to worry about the owner suddenly opting to sell or recover the apartment to accommodate a new lease.