The first official contract in Shanghai for acquiring second-hand houses for rent-to-own housing has been completed.

On March 31, Mr. Shi, a resident of Shanghai, received the “Jing’an District Secondhand Housing Acquisition-to-Conversion Rent-to-Own Housing Ticket Voucher.” This also became the first officially executed contract signing citywide since Shanghai launched the work of acquiring secondhand housing for rent-to-own (assisted rental) housing.

In February this year, Shanghai carried out the initiative of acquiring secondhand housing for rent-to-own (assisted rental) housing, selecting Pudong New Area, Jing’an District, and Xuhui District as pilot areas. The first batch of acquisitions will mainly focus on homes with matching unit types, reasonable layout, mature supporting facilities, and convenient transportation, providing more high-quality housing choices for young people.

On the afternoon of March 31, the first contract-signing ceremony under Jing’an District’s “Housing Acquisition-to-Swap” model was held. All images in this article are photographed by ZHU Weihui, a reporter from The Paper.

According to the Jing’an District Housing and Administration Bureau, under the acquisition standards, Jing’an District mainly focuses on properties priced at under 4 million yuan, with a construction area under 70 square meters, within 3 kilometers of metro/subway station points, relatively close to industrial parks, industrial parks, and core business districts, with clear property rights, and suitable for use as rent-to-own (assisted rental) housing.

For residents with housing improvement needs, residents may first lock onto their intended new commodity housing units in Jing’an District. They can fill out the application for a swap through the sales of new developments, or directly contact the district’s affordable housing company for matchmaking. After the district’s affordable housing company entrusts a professional institution to evaluate the price, it will issue residents a corresponding amount of “housing ticket” vouchers at the assessed price, which are used exclusively for swapping for new homes. As a rule, the validity period of a housing ticket voucher is half a year; in special circumstances, it must not exceed one year.

Through this method, issues such as long swap cycles and the need to pay intermediary fees that previously arose from selling homes on the market have been addressed. It can also more quickly ease residents’ funding pressure for housing improvement.

“One application, and the contract is completed in over a month”

Mr. Shi’s two children are in the fourth grade of primary school and in the preparatory class, respectively. To give his children a better environment for growth, he had long had the idea of selling his “old, small, dilapidated” home and improving housing for the whole family. The old home is located in Jing’an District on Baoshan Road, in a core location. It is a 15-story elevator building apartment with an area of about 40 square meters. However, after the property information was listed on an intermediary platform last year, there were few inquiries. The old home couldn’t be sold, and his plan to buy a new home could only be put on hold.

After the Spring Festival this year, when Mr. Shi visited the “Yu Jing’an” project developed by Poli Real Estate (Shanghai) Co., Ltd., he learned about the policy of acquiring secondhand homes for rent-to-own (assisted rental) housing and submitted an application. About a month later, the district’s affordable housing company provided an assessed price of roughly 2.2 million yuan through the entrusted professional institution. This payment is used exclusively in the form of housing ticket vouchers for purchasing new homes within Jing’an District. Together with his provident fund loan and his own funds, Mr. Shi decided to buy a three-bedroom unit layout with an area of 112 square meters.

Mr. Shi, who received the “Jing’an District Secondhand Housing Acquisition-to-Conversion Rent-to-Own Housing Ticket Voucher”

The entire swap process is completed within a little over a month, and there is no need to list on the market. With government endorsement, it greatly reflects efficiency and certainty. Mr. Shi said candidly that “this is a very good channel.” A relevant person in charge from Jing’an District’s affordable housing company said that the acquired property is next to metro lines 3/4/8 stations, making commuting convenient. The area is also moderate—around 40 square meters. The plan afterward is to rent it out as rent-to-own (assisted rental) housing to groups such as new residents and young people. This size and location should be in demand.

“Now the pain point for customers isn’t whether they want to swap, but whether they dare to swap.” From the perspective of the developer, Huang Xing, Director of Marketing Management Department at Poli Real Estate (Shanghai) Co., Ltd., said that soon after the policy was issued, the consultation phone calls were “overwhelmed.” Everyone was paying close attention to how the policy would be implemented. In his view, once the swap channel is opened, it will greatly promote sales.

Efficiently activate resources for the benefit of multiple parties

During the “14th Five-Year Plan” period, Jing’an District’s targets for raising and supplying rent-to-own (assisted rental) housing were 23,433 units for raised supply and 17,211 units (interims) for actual supply, exceeding the planned targets. During the “15th Five-Year Plan” period, Jing’an District plans to add supply of about 13,000 units (interims) of rent-to-own (assisted rental) housing. However, as Shanghai’s central urban area faces tight land resources, traditional models can no longer fully meet incremental demand. As a result, the innovative model of “Housing Acquisition-to-Swap” emerged.

According to the Jing’an District Housing and Administration Bureau, this innovative model follows the philosophy of “government guidance, state-owned enterprises’ implementation, and market-based operation,” focusing on two-way efforts in both the collection of rent-to-own (assisted rental) housing units and residents’ housing needs. Under the acquisition standards, it mainly focuses on properties priced at under 4 million yuan, with a construction area under 70 square meters, within 3 kilometers of metro/subway station points, relatively close to industrial parks, industrial parks, and core business districts, with clear property rights, and suitable for use as rent-to-own (assisted rental) housing.

How is the acquisition price determined? Shanghai Jing’an said that the acquisition price strictly follows the principles of market orientation and fairness. It adopts a process of “double evaluation + state-owned assets record filing + price determination through consultation.” The district’s affordable housing company entrusts qualified professional evaluation institutions to reference the actual transaction prices of real secondhand homes in the surrounding area, conduct initial inquiry and evaluation and pre-transaction re-evaluation, form an acquisition guidance price, and then submit it for record and filing with the state-owned assets regulatory department. It applies a “one house, one price” determination. Ultimately, the acquisition price is negotiated and confirmed with the seller, ensuring the price is objective, fair, and achieves objective transparency, fully protecting the legitimate rights and interests of homeowners.

It should be clarified that the acquisition proceeds for the property being sold are settled in the form of “housing ticket” vouchers. The housing ticket voucher is used for a specific purpose and cannot be repurposed. Residents later purchase new commodity housing in Jing’an District using the vouchers. After the developer and residents sign the pre-sale contract and complete the pre-sale registration, residents apply for fund settlement using the “housing ticket” voucher, ensuring the money is used for purchasing new homes.

Under the model design, Jing’an District’s affordable housing company serves as the implementing entity. It follows market-oriented principles to acquire existing small-sized units with complete property rights and suitable total prices within the district. After the properties are uniformly renovated and upgraded according to standardized criteria, all of them are incorporated into the district-level rent-to-own (assisted rental) housing management system. Using standards lower than the market rent in the same area, they provide targeted housing support for groups such as new residents and young people. This not only effectively expands the scale of rent-to-own (assisted rental) housing and optimizes the supply layout, but also more precisely fills the regional shortfalls in rental housing, meeting multi-level and diversified housing needs.

According to The Paper’s earlier report, in terms of funding raising, Jing’an will establish a diversified funding input mechanism involving monetized supporting construction funds, company own funds, and commercial bank loans. It will adhere to the principle of balancing medium- and long-term funds. The rental income generated from the continuous operation of rent-to-own (assisted rental) housing will be used exclusively for cost recovery and rolling development, forming a healthy cycle in which investment and operations give back to each other.

Next, Mr. Shi’s old home will complete handover within the next two to three months. The district’s affordable housing company will first conduct an identification of the property’s nature as rent-to-own (assisted rental) housing and a rental evaluation. Afterwards, it will develop a renovation plan based on the actual conditions on site. After the renovation meets the standard for move-in with only a suitcase (ready to live in), it will be supplied to the market for renting out in accordance with the requirements for rent-to-own (assisted rental) housing.

A relevant person in charge from Jing’an District’s Housing and Administration Bureau also said that currently, the “Housing Acquisition-to-Swap” in the first batch mainly targets residents who have old homes under their own names but also have a funding gap when purchasing a new home. In the future, it may explore approaches such as “swapping old homes for secondhand homes” in conjunction with the work being carried out, and linking with urban renewal tasks such as installing elevators.