Lease Guidelines

Rental Rates and Costs

How are rents quotes and paid?

Rents are quoted in U.S.dollas per month, and usually RMB payment is made upon the middle rate on first day of each month. Rents are paid in RMB monthly in advance.

Is security deposit required?
A security deposit of 1-3 months rent, rates and service charges is usually required and is refunded at the end of the term without interest. Bank Guarantees are sometimes accepted. key money is not charged.

What is typically included in the rent?
The rent included the usage of the furniture, house/apartment and common space. most developments provide its own club membership included in the rent. other costs include, managements fees which most of time included in the rent already, electricity and other utilities. these additional charges may be revised during the lease term.

What does the service charge cover?
Service charge typically cover maintenance, use of communal facilities, security and cleaning of the common areas and base building systems.

Who pay for the brokerage fee?
Management company or Landlord usually pay the fee.

Do landlords provide any incentives?
Incentives typically are limited to a rent-free period, provision of white goods/furniture and varies depending on market conditions.

Lease Term

What is the typical lease term?
Usually one year fixed lease. There are some service apartments available offering fully-furnished suites for short periods(1-6 months), most two year leases will include a tenant's break-clause allowing the tenant to give 2 or 3 months written notice at any time after 9-10 months of the lease. This means that tenants have a minimum stay of 12 months without incurring a penalty should they decide to leave. 

Do tenants have automatic renewal rights?
No, renewal options or extensions have to be negotiated separately with landlords.

What is the process to renew a tenancy?
The landlord issues written notice to the tenant between 2 and 3 months prior to the expiry of the tenancy to indicate their intention regarding renewing the tenant. Within 2 months of receiving the written notice the tenant has to use written reply to accept or refuse the new tenancy.  negotiations of the new terms can take place right up to the expiry of the old tenancy.

Do tenants have automatic sublet or assignment rights?
No. The right to assign the lease to a third party is rarely granted.

What is required at the commencement of the lease and what costs are associated with it?
On commencement of the term, the tenants is responsible for payment of the security deposit , the first month's rent, management fees which usually covered by monthly rent already.

Is it possible to terminate lease? What is the process and there penalty?
Normally, there are break lease rights within the contract. early terminations prior to being able to enact the break-clause have to be negotiated with the landlord who may ask for payment of a penalty or the introduction of a replacement tenant.

What kind of the replacement occupant is acceptable under the same lease?
Tenant retain the right in the event of occupant being transferred to another location or leaving the company and upon reasonable prior notice to landlord, to nominated the another employee of its company as a replacement tenant.

At the conclusion of a lease term, what is the process for handling back the property?
At the end of the lease, the tenant is responsible for reinstating the premises to the same condition as it was at the commencement of the term, subject to normal wear and tear. Landlords will prepare an inventory of the condition of their premises and the list of landlords fixtures and fittings at the commencement of the term.

Tenant Improvements&Decoration Works

Does the tenant have the right to make improvements?
A request must be submitted to the landlord and approved before the work begins.

Typically Landlord Redecoration and Utilities Supply

What decoration work are most landlord's expected to do prior to handover.
Prior to the handover of the premised to the tenant landlords will undertake to do the following works:

Sand and polyurethane wooded floors -most houses/apartments have wooden parquet or strip wood following. It is standard to sand them down and polyurethane with gloss finish.

Repaint all walls and ceilings-walls and ceilings are generally finished in plaster and walls painted off-white whereas ceilings are stark white.

Check all electricity wiring, appliance and gas appliance and all sanitary and water apparatus are in good, safe and working condition-most landlords will supply all white goods as well as air-conditioning units, this ensures that they have been well maintained. Most landlords will expect the maintenance of such appliance to be borne by the tenant. fair wear and tear is usually included in the tenancy to ensure any older, non working appliances are replaced at the cost of the Landlord.

If carpets are provided by the Landlord then they should be deep cleaned prior to handover.

What is the electrical power?
200 - 220 volts, 50 cycles

Are utilities connected and included?
Landlords shall read the meters as a new record when tenants check in. Utilities are usually connected but tenants will have to change the name of the occupant. Except in some serviced apartments the landlords are responsible for the payment of the utilities. All utilities are charged monthly.

What is the process for applying for telephone lines?
Most buildings have more spare telephone line. Tenants may get one more line after signing the application form to the landlords.

Other

Who is the typical landlord, for example, a large institution, insurance firm, individual, etc?
It varies to a large extent, although the major landlords with extensive residential property portfolios are major Hong Kong-based property developers such as Citic Group, Shui'on Properties, Sun Hung Kai Properties, Kerry Properties, etc. There are also many individual owners who have plenty of residential properties in apartments and villas (some hold the old houses mainly located in the French Concession Area.)

Are expatriates clustered in certain areas?
Most expatriates prefer to live in the downtown area which is the prime location with a quiet environment. For those with families, particularly if they attend the American School, SIS or some other foreign schools, then the Pudong New Area and Hongqiao Area are popular, where most of the villa properties are located. 

How important is the reputation of the owner, for example, do you only recommend certain owners or developers?
With the major landlords providing excellent management of their portfolios it is beneficial to lease a unit in one of the single owned buildings, tenants should avoid renting a separately/individually-owned property unless it is managed by a good management company

What types of properties do expatriates typically occupy? for example, high rise buildings or low rise buildings?
Major residential buildings in Shanghai are fairly new and in downtown area, most properties are high-rise. there are a number of houses and low-rise properties in Pudong New Area and Honqiao Area, which are close to Pudong international airport. and Hongqioa domestic airport.

Are sports and recreation clubs easy to join?
Most clubs offer preferred membership to those who are prepared to play competitive sport. The clubs are usually very friendly and offer an ideal opportunity to meet new friends. Most are close to the main foreigner's residential area, such as Hongqiao, Former French Concession and Pudong