China moves to clamp down financial risks in rental housing market

BEIJING, Dec 25 (Reuters) - China will curb financial risks in the rental housing market by tightening lending to rental housing companies, and capping the ratio of their rental income from loans taken by rentees at 30%, the housing ministry said on Wednesday.

The ministry will work with five other government entities, including the banking and insurance regulator, to better regulate rental companies and safeguard Chinese rentees’ legal rights, according to a guidance published on its website.

“(We) will make clear requirements on the term and size of the loans for the rental housing business,” the guidance said, adding the regulators will strengthen the supervision of rental companies with risky business models such as paying home owners more than the eventual rental price to gain market share.

Rapid growth in the sector with little regulatory control has created unexpected financial risks. (Reporting by Beijing Monitoring Desk; Writing by Yawen Chen; Editing by Muralikumar Anantharaman)