We often get questions from our clients about the residential maze of Shanghai. Below you will find a selection of the most common, which we hope you will find useful in your home search.
What constitutes a "good deal" on a rental, and how do I know that the price is fair?
Rents in Shanghai vary depending on many factors. Key points include:
A property's location not only refers to the area/district but also to whether it is directly on a noisy road or tucked away on a quiet lane, who the neighbours are (international or local community), and how close it is to shopping/entertainment etc. The most important location factor when it comes to high-rise buildings is the floor the apartment is on—the lower the cheaper, as high floors usually come with fresh air, lots of light and sunshine, nicer views and quieter surroundings.
Historical buildings with old renovated apartments (typically within the former concession areas of Shanghai) are more expensive than units in new residential compounds, despite sometimes suffering from rusty water pipes and insufficient electricity to power an expat family's air conditioner use in the hot summer months. A new villa or apartment downtown costs about twice as much as a similar place in Pudong or Hongqiao.
What kind of deposit do I have to pay for my new home? And will I get it back when I leave?
2 months rental is the standard. Some landlords will ask for more—do not accept it!
Your landlord is entitled to forfeit some or all of the deposit upon lease termination in order to cover the following costs:
Premature lease termination without good cause will most likely mean that you lose the entire deposit, unless you have a Diplomatic Clause in your contract. If you have fulfilled your lease obligations and not damaged the premises or any of the provided furniture/fittings, you are entitled to have the full deposit without interest returned no later than 30 days after you move out.
What currency is used for rent payment?
Usually, rents are quoted in US$ but paid in RMB. This matter is subject to negotiation with your landlord. Very few landlords now accept USD as the exchange rate is changing.
How does a landlord select a tenant? How can I secure a contract if there are other interested parties?
An important thing to keep in mind when you deal with a private landlord (as opposed to the expat-focused compounds which have their own management/leasing teams) is that you are about to rent someone's home or someone's investment. You will be evaluated on criteria such as your appearance, income, nationality etc. The bottom line for a landlord is "will this person be able to pay the rent on time every month?" and "will my property be well taken care of?"
If a landlord has two potential tenants to choose from, you can be sure that it will not be the bachelor who asks if it is ok that he throws parties every weekend who ends up signing the contract. Make an effort to give your future landlord a good impression of you and your intentions, and try to maintain a good relationship after you move in as well.
In some cases, a popular property with several qualified parties ready to sign, the landlord's choice will be determined by who can offer the landlord the best terms, such as the highest rent or the longest lease term.
Is it worthwhile to find a cheap place and then renovate it myself?
Most landlords who want to rent out their property prefer to renovate it themselves, and spend a lot of time and money doing so before they submit it to an agency. This is particularly the norm for the areas which are popular for expat housing, such as downtown, Hongqiao and Pudong.
However, the outskirts of Shanghai ("local" districts) offer limited property which is up to the standard that an expat would expect, and since housing in these areas is very cheap it might be worth to keep an eye out for a place that can be rented for a very low amount and then fix it up yourself.
If you opt for this solution, make sure that you:
What is the minimum lease term in Shanghai?
Most private landlords and compounds catering to expats will not accept lease terms of less than 12 months. If you can sign a lease contract of 2-3 years it gives you the benefit of a slightly reduced rent.
Shanghai has a limited selection of serviced apartments for short-term rentals, but these are significantly more expensive than 1-2 year leases.
What extra costs, such as utilities, should I include in my budget besides the rent?
Utilities cover water, gas, electricity, phone, ADSL and satellite TV fee.
In addition, some landlords will charge you a management fee. The management fee covers security, cleaning and maintenance of communal areas, access to facilities (such as a pool, gym and/or children's playground) and building administration.
If you need a parking space you will usually have to pay an extra monthly fee on top of your rent.
Is the rental price negotiable?
All rental prices on our website are the asking price. There is some negotiability depending on the terms of the contract. For example if you can move in immediately, do not need furniture and there are not additional requirements you will almost definitely get a better rental than if you want to move in after 6 weeks, need additional furniture to what is in the property and request some renovation or repairs.
Do I have to pay commission if I find a property with Ark International?
No. Legally in Shanghai the agency fee is a total of 70% of one month's rent, and the tenant and landlord have to bear 35% each, respectively. However, in reality if the property you are renting is above RMB 8,000, no agency fees will be paid by the tenant. Ark International does not list properties below RMB 8,000 and thus the tenant pays no fee.
Who pays for legal fees in connection with a lease?
There are no legal services or lawyers required to sign a lease agreement in Shanghai. Should either party request legal counsel, they will be responsible for covering their own costs.
I’m interested in a colonial property but it seems the price is very high. What should I be looking for?
The rental value of renovated colonial properties are far harder to compare as the rental price per sqm varies hugely depending on location, renovation, private outdoor space, furniture and size. This is also true for new build properties, but the variation is by no means as large. The comparison below is a good example of the diversity of colonial properties:
Property A: Colonial lane house in Jingan district, 270sqm, 2 large bedrooms, 2 study rooms, a family style attic, and 2 full bathrooms, western kitchen, 15sqm garden and 10sqm roof terrace – rented for US$2700/month
Property B: Colonial apartment in Xuhui district, 95sqm, 2 bedrooms, 1 bathroom, 100sqm garden – rented for US$2700/month
What makes these two properties so different enabling one landlord to get almost 3 times the rental yield per sqm? The key-factors can be summarized as follows: