Although, the rental housing sector is heavily regulated in China, the system is in favor of landlords. The landlord is covered by the guaranty money and there are no restrictions regarding discrimination of tenants.
This situation can be so different comparing to your country. In this article, we will discuss about the differences between Chinese (Shanghai) and Spanish housing deposits.
The common points in both regulations are the following:
1- Upon signature of the rental contract, tenants are required to pay the landlord a deposit normally equal to 2 months’ rent payment, in order to guarantee that the property will be returned to the owner in the same state as before the occupation. In Shanghai is the same.
2- In both countries, this deposit cannot be used to pay the rent to the landlord.
3- This deposit will be returned as the tenant moves out, assuming that the property is in good conditions.
Once we have reviewed the common points, let’s start with the differences:
1- In Spain, the deposit should be held by an agency independent of both landlord and tenant, which will not release the deposit until both parties agree. The deposit can (e.g.) be held with the housing department of the local government. If the landlord does not give back the deposit in due time to the tenant, then the legal interest rate will be applied.
In Shanghai, the deposit is hold by the landlord unless the landlord would give permission to the agency. The deposit should be returned to the tenant when the check-out process is finished. From the legal point of view, the landlord is not allowed to keep the deposit after the check-out of the leasing without any reason.
2- In Spain, after 5 years of rental contract, the deposit may be increased.
However in Shanghai, the deposit won’t increase until the rental is increased.
3- In Spain, landlord is liable to pay income tax at a rate of 25%, assuming that he is a non-resident whose Spanish property is rented.
Whereas in Shanghai, there is no matter where the landlord is coming from, they need to pay revenue tax at the rate of 5%. The income tax is not calculated on rental only. It’s a combination of all incomes together.
4- In Spain, you can deduct maintenance expenses from your Spanish income tax, but in China this system is not developed.
When the landlord or tenant may terminate a contract in Shanghai?
a) The landlord may terminate the rental contract when the tenant:
Does not pay the rent or deposit.
Rent the property to a third party without the landlord’s consent.
Deliberately causes damages to the property. Normally the landlord will ask for compensation or resume to the original condition. If not, the landlord will deduct the compensation from the deposit.
Undertake repairs without landlords’ consent. The landlord will ask the tenant to pay for all the cost, but not before the termination of the contract. Unless the damage caused by the tenant is severe and structural.
Causes serious nuisance to the neighbors. You will receive reminders from landlord or the agency. The landlord can’t terminate the contract unless the tenant wants to do it.
In any of these cases, the problem will be solved by the agency at the initial stage, a good agency can solve lots of these problems smoothly.
b) The Tenant may terminate the rental contract when the landlord:
Fails to make the necessary repairs to keep the property in a fit and habitable condition.
Disturb the tenant’s dwelling use.
So, if you are looking for renting an apartment in Shanghai, contact our agency. In HomeofShanghaihousing we will guarantee 100% your deposit back the same day you check – out.
You don’t have to worry for your deposit as we are a reliable agency. We just want to help you renting an apartment here.