Lease Contract and Payment Terms |
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What is a Fapiao and why do I need it? |
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A Fapiao is a tax receipt for funds paid. The use of Fapiaos in China is a means for the tax authorities to ensure that value added tax (VAT) on a transaction has been paid. In many countries, the payee for goods or services issues a receipt to the payer and is responsible for declaring the VAT. In China the tax receipt, a Fapiao, must be issued by the tax authorities. It is either pre-paid and printed at the tax bureau, or printed by the payee on offical Fapiao paper using a system that's linked on-line to the tax authorities. To comply with accounting rules, your employer needs a Fapiao for all rent payments made. The Fapiao should state the names of the payer and payee, and also note that the payment is for rent. The VAT for rent payments is currently 5%. |
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Same size, but why is the rent different? |
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Good quality renovations at the property. Better furnishings and fittings. The individual landlord's rent expectation. In Shanghai, some landlord's are keener to get early rental income than others. Most Shanghai property developments are built in phases. A property at a new phase is typically better than an older one and sold at a higher price. So, rent at the newer property is higher. For expat houses, corner properties with larger gardens rent for more. For expat apartments, properties on higher floors rent for more. An apartment with a view and Sunnier south-facing units. Good views command higher rents, but if the property faces another tower or building site, it's not worth it. |
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How do I pay the rent and what currency is the rent paid in? |
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The rent is paid in RMB by bank transfer to the landlord's account. The rent is paid in RMB currency. For corporate property leases, your company will do this for you. For private leases, we will show you how to make the monthly bank transfer. Rents are sometimes quoted in USD but landlords expect that the agreement specifies that payment is made in RMB, usually at a fixed exchange rate. Landlords rarely accept foreign currency payments, even if paid off-shore. Note that only foreign currency, but not RMB, can be transferred from abroad into China. |
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How much is the security deposit and when is it paid? |
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A two month security deposit is the normal in Shanghai. Typically you pay one months' rent on signing the Tenancy Agreement. The landlord may also ask for the full security deposit on signing if there are substantial custom renovations, or if there's a significant lag time between signing the tenancy agreement and the lease commencement date. Currently there is a strong trend that corporate clients are using Bank Guarantee Letter as security deposit instead of paying cash deposit. Some landlords will accept this depending on who the corporate client is, while other landlords will not. Your property consultant will work with you to obtain the best terms possible. |
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How much is the security deposit and when is it paid? |
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A two month security deposit is the normal in Shanghai. Typically you pay one months' rent on signing the Tenancy Agreement. The landlord may also ask for the full security deposit on signing if there are substantial custom renovations, or if there's a significant lag time between signing the tenancy agreement and the lease commencement date. Currently there is a strong trend that corporate clients are using Bank Guarantee Letter as security deposit instead of paying cash deposit. Some landlords will accept this depending on who the corporate client is, while other landlords will not. Your property consultant will work with you to obtain the best terms possible. |
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What is included in an expat property lease? |
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Typically, besides property usage rights, the property lease includes major appliances, management, satellite TV fees, lighting and curtains or blinds. Expat houses and some high-end apartments will have dishwashers and clothes dryers. Expat apartments are often furnished, while houses are often semi-furnished or unfurnished. Depending on the rent, furniture can often be negotiated into a lease. Family club memberships are normally included in a house lease. If required, utility subsidies are included at cost as are parking spaces at apartment towers. |
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How long is a typical Shanghai expat property lease for? |
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Expat apartment leases are normally for one year. For expat houses, many landlords (and many tenants) prefer 2 year leases especially if the lease includes custom renovations and furniture purchases. Some landlords will accept a 2 year lease, with a break option for the tenant after the first year. |
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What language is the lease agreement and what should I pay attention to? |
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The lease agreement is usually bilingual (Chinese and English) unless both parties are comfortable with one language. The template is normally standard, you need to pay attention to the lease term, deposit, rent and other charges, termination clause (if any), penalty term, landlord’s ID and ownership certificate and etc. Usually your property consultant will help you go through the lease agreement to make sure your interest is well protected. Make sure that you clearly understand what is included in the rent and what is not, to avoid any misunderstandings later on. |
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What details should I consider about my apartment before signing the lease? |
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Washer and dryer: In China, it is quite common that the washing machine doesn’t connect to hot water or have a heating function. Additionally, dryers are less popular since many Chinese prefer to hang their clothes outside. If you absolutely must have these appliances they can be found in the marketplace and a request should be made to the landlord.
Air conditioning: Most air conditioners in China have two functions: cooling for summer and warming for winter. Generally, separate air conditioners are more economical in terms of saving energy, while central air conditioners provide more consistent temperatures throughout the property. This method is also more convenient.
Dishwashers: Very few Chinese people use dishwashers at home or leave any space in the kitchen for installing them since the maid tends to wash dishes by hand. However, installation can be negotiated with landlords.
Water filter: Never drink tap water unless you are informed by the relevant health authorities that it is safe for drinking. Generally, water in China is not safe for consumption. Installing a filter can enhance the quality significantly, although it is still advisable that filtered water should not be used as drinking water.
Mattresses: Most Chinese landlords prefer to install rock hard mattresses. Please try it for yourself and if the bed is uncomfortable express your concern to your reliable Abbama Real Estate Realty consultant who may be able to negotiate a different mattress with the landlord.
Fly screens: If you look for a home during the cooler seasons you may not be aware of the mosquito issue that will arise in warmer weather. Mosquitoes are usually harmless but are definitely annoying in summer. Make sure you request to install fly screens if your selected home is a garden villa or on a lower floor.
Blackout curtains: Make sure all bedrooms are fitted with blackout curtains to ensure rooms are completely dark and ensure a sound sleep.
Voltage: The standard voltage in China is 240V. It is not advised to bring any electrical appliances from your home country unless you have the correct adaptor.
Internet access: If you request high-speed broadband access of over 1M, you should inform your agent to negotiate with the landlord before signing the contract. Normal internet packages provided by China Telecom only allow (wired) access from one computer. If you want extra sockets for wired internet access in other rooms an extra charge may be levied.
International TV channels. Developer-owned properties usually provide international TV channels (HBO, CNN, etc) with a maximum of only 15 English-language channels. With the assistance of your professional Abbama Real Estate Realty consultant you may be able to negotiate with your landlord to install a satellite dish with reception to over 50 English-language TV channels.
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