Expatriate Forums in China

shanghai_properties · Joined: 23 Jun 2007 Posts: 4 Home Country: china

ALL YOU NEED TO KNOW ABOUT SIGNING A LEASE IN CHINA
Visas
In order to sign a lease any kind of visa is acceptable.
Standard Lease
Developers and Landlords provide Leases in Chinese and English. The agreed terms and conditions are included in the Lease. In the event of disputes, the Chinese version will prevail.
Offer letter
All basic terms and conditions are written in an "Offer Letter" and submitted to the Developer or Landlord. Once agreed upon the offer is signed by both parties and the agreed terms and conditions are added to the lease.

TERMS
Long term
The typical lease term is two to three years usually one year fixed and two years optional.
Short term
Short-term leases are below 6 months but Landlords generally don’t agree to short term contracts as they wish to keep turnover to a minimum. Serviced apartments are the best option.

PAYMENTS
Rental
Rents are quoted in US dollars but can be paid in both USD or RMB. Rent is paid monthly in advance by money transfer to the landlord’s bank account. Some landlords or developers prefer you to pay into an overseas bank account.
Deposits
To fully secure the property you can pay a deposit so that the property is taken off the market. A refundable security deposit of 2 or 3 months rent is paid prior to moving into the property. It protects the landlord from potential damages to the property and unpaid bills and rent. It is refunded at the expiry of the lease once the property and equipment is checked all bills are paid.
Receipts,
Landlords are required to pay a 5% tax on rentals and issue a receipt called a "fapiao". Your company will need a "fapiao" (tax receipt) if tax deduction claims are made in China. If you are not claiming deductions a non-tax receipt “shoju” is fine.

CLAUSES
Break lease clause
An early termination clause can be included after a set period of time. If the landlord breaks the lease the deposit and compensation of two months rental should be paid.
Diplomatic clause – This is for foreign diplomats and tenants who are transferred from Shanghai by their company. A letter of transfer from the company must be submitted and no penalty should be incurred.
Sublet clause – A tenant may not be able to finish their full lease term for whatever reasons. A sublet clause allows them to find another tenant who can fulfill the same terms and conditions without incurring a penalty.
Right to renewal
There is no mandatory right to renewal of premises so terms should be discussed during initial tenancy agreement negotiations.

OTHER ITEMS
Household Insurance
Landlord's must take out structural building insurance which covers the property itself and common areas. Tenants should insure their own belongings especially in the event of damage done by poor construction
Taxation
A property tax of 0.1% of the rent received during occupancy should be covered by the landlord.
Management fee
Management fee are usually are included in the rent and cover the management’s office administration, maintenance, cleaning and repairs of properties, grounds, common areas and facilities.
Other inclusions
Depending on your budget you can include the following items. Utility bills like water, gas and electricity with a cap on the monthly amount, health club membership, extra telephone line (maximum of 2), car parking and housekeeping.
Unfurnished
If the property is unfurnished and you want to choose the furniture, make sure you get one to two month’s rent as a budget to purchase furniture with. If you want an unfurnished property it can be 10% - 20% cheaper however if the apartment is furnished and furniture has to be removed, you won’t get much reduction.
Renovations
Landlords should paint walls, finish floors, and ensure all electrical appliances are in good working order. If the property is to undergo major renovations, tenants can choose their own décor, furnishings, kitchens and bathrooms etc.

STANDARD FURNITURE
A basic fully furnished property should include:
•* White goods – Water dispenser, Microwave, Refrigerator, Washing machine
* Living & dining - Sofa & sofa chairs, Coffee table, TV set, TV stand, DVD player, Dining table & chairs
* Bedroom - Bed &mattress, Bedside stand, Drawers, Wardrobe
* One or two IDD telephone lines and ADSL line
NOTE: Higher rental properties will include Dryers, Dishwashers, Lamps, Buffets, Cabinets, Dressing tables, Bedroom sofas, Study chairs, Desks, more TV sets etc.

Adrienne Farrelly
General Manager
Shanghai Properties
“Expat agents speak your language”
Suite 5L, 5th flr, La Doll Int’l Plaza,
831 Xin Zha Rd, Jing An, Shanghai, China.
T: (8621) 6218 0517 or 6218 0581
M: (86) 13122 810 421

Manlin · Gender: Joined: 13 Mar 2007 Posts: 81 Home Country: uk

Adrienne hi,

Maybe things are different in Shanghai.

In Beijing, it is becoming more and more common for the Landlords to insist that the rent be quoted in RMB not USD.

I am sure that you know that the days of 1USD = 8.3RMB are long gone. There is a continual creeping re-evaluation. At present 1 USD = about 7.61RMB.

RMB is the national currency (not USD) and they are becoming more and more concerned over loss of revenue because of changing exchange rates. This is particularly true for the long-term rentals.