With the continuous development of China’s real estate market, the demand for rental housing is also increasing. In order to encourage individual investors to invest in real estate and increase rental housing supply, many local governments have introduced financial subsidies policies. These grants for investment property can effectively reduce investors’ capital pressure. This article will introduce several major subsidies, analyze their applicable scope, subsidy standards and application conditions, and finally put forward some suggestions for investors.
Shanghai: one-time reward for each rental unit
According to Shanghai’s relevant policy documents, individual housing investors can apply for a one-time reward of 8,000 yuan from the municipal finance for each newly-built rental unit they provide. The subsidy targets newly purchased commercial residential buildings for rent. For investors who purchase old residential buildings for reconstruction and rental, the one-time reward standard can be increased to 10,000 yuan per rental housing unit. It should be noted that each individual can apply for subsidies for up to 3 rental housing units.
The main application conditions are: the property must be located in Shanghai; the first property certificate must be obtained after January 1, 2019; the smallest rental area must meet local regulations; the rental term must be no less than 3 years etc. In addition, applications can be submitted online through Shanghai’s housing rental service platform.
Guangdong: proportionally subsidizing decoration and rent loss
Guangdong Province also provides proportional subsidies for the decoration and rent loss of rental housing. According to calculations, investors can receive rewards of over 10,000 CNY per rental unit. The subsidy policy covers both newly purchased commodity housing and reconstructed old housing.
The specific subsidy calculation formula is: Subsidy = Actual decoration expense × Decoration subsidy ratio + Estimated rent loss × Rent loss subsidy ratio. Among them, the decoration subsidy ratio and rent loss subsidy ratio depend on the city. Taking Guangzhou as an example, the former is 30% and the latter is 100%.
It should be noted that the decoration subsidy has an upper limit of 100 CNY per square meter, while the rent loss subsidy has an upper limit of 50 CNY per square meter per month. Each individual can apply for subsidies for up to 5 rental housing units.
Beijing: comprehensively supporting individual rental housing
Beijing has successively introduced a series of subsidy policies to support individual housing leasing and rental development. For example, one-time rewards for each rental unit, preferential personal income tax policies for rental income, and financial subsidies for property management fees. These measures reduce rental investors’ costs from multiple dimensions.
The current one-time reward standard for each rental unit is 8,000 CNY. Meanwhile, after renting out housing, individual investors only need to pay personal income tax at a reduced rate of 10% for the rental income obtained each year. In addition, investors can receive property management fee subsidies of 8 CNY per square meter per month. It is worth noting that each individual investor can apply for subsidies for up to 10 rental housing units in Beijing.
Local governments have introduced many preferential subsidy policies to support individual housing investors to increase rental housing supply. Investors should fully understand the applicable scope, standards and application conditions of various subsidy policies, rationally use financial leverage, and strive to maximize policy dividends.