Lease basics: one month’s deposit, three months upfront
- Deposit and payment: The usual “ya yi fu san” arrangement is a one-month deposit plus rent paid three months at a time, so four months’ worth is due at signing. Some platforms and landlords allow monthly payment with a one-month deposit.
- Agency fee: Through an agency you typically pay around one month’s rent. The rate and who pays differ by city and agency.
- Housing Rental Regulations: Under the regulations in force since 15 September 2025, leases must be signed under real names, any deposit amount, return date and deduction grounds must be written into the lease, and outside the cases in the lease the landlord may not deduct from the deposit without a justifiable reason.
- Lease registration: The landlord registers the lease with the housing authority free of charge; if the landlord does not, the tenant can. Depending on the city, proof of registration is used for residence permits, school enrolment and the like.
Benefits for tenants
If you own no home in the city where you work, you can claim the housing rent special additional deduction for income tax, and you can also withdraw from the housing fund to pay rent.
Withdrawing housing fund money for rent is allowed regularly within city limits; conditions and caps follow the city housing fund centre’s rules.
| City category | Deduction (monthly) | Examples |
|---|---|---|
| Municipalities, provincial capitals, cities with independent planning status, etc. | 1,500 yuan | Beijing, Shanghai, Shenzhen, Chengdu |
| Cities whose urban districts have over 1 million registered residents | 1,100 yuan | Other large cities |
| Cities with 1 million or fewer registered urban residents | 800 yuan | Smaller cities |
If both spouses work in the same city, only one of them can claim it, and a couple cannot take the mortgage interest and rent deductions in the same year, even split between them.
Costs of buying
| Item | Basis | Notes |
|---|---|---|
| Down payment | Commercial loans: at least 15% | Some cities set more |
| Deed tax | Family’s only home: 1% up to 140 m², 1.5% above / second home: 1% up to 140 m², 2% above | Since 1 December 2024, including Beijing, Shanghai, Guangzhou and Shenzhen; otherwise the local standard rate (3–5%) |
| Maintenance fund | Per square metre or a share of the price, set locally | Mostly paid when buying a new home |
| Agency fee | Second-hand homes: usually about 1–3% of the price | Varies by city and agency |
| Property management fee | A few yuan per square metre a month | Varies by estate |
| VAT (seller) | Exempt when selling a home held 2 years or more | Uniform nationwide, including the four largest cities, since December 2024 |
Deed tax follows MOF, STA and MOHURD Announcement No. 16 of 2024. “Family” means you, your spouse and minor children.
Reading the market with the rent-to-price ratio
When this ratio is below the mortgage rate, renting the same home tends to cost less each month than the interest on buying it. In many parts of China’s big cities the ratio is below mortgage rates of around 3%.
Buyers, however, build equity through principal repayments and are exposed to price changes, while renters face rent rises and moving costs, so monthly cost alone does not settle the question.
Rent-to-price ratio = monthly rent × 12 ÷ price Example: 7,000 × 12 ÷ 3,000,000 = 2.8%
Monthly cost of the same home (example)
Assumptions: new 90 m² flat, price 3 million yuan, rent for the same flat 7,000 yuan, first home, 30% down, commercial loan 2.1 million yuan over 30 years at 3.05% with equal instalments, deposit rate 1.5%, property fee 3 yuan per m² a month, marginal tax rate 10%.
In this example the two are almost equal. A 1% fall in price is a loss of 30,000 yuan a year (2,500 a month) and a 1% rise a gain of the same size, so price expectations and how long you stay change the result a lot.
Interest falls each year while rent may rise, and rate changes alter the cost of buying. It is worth recalculating with your own numbers.
| Item | Renting | Buying |
|---|---|---|
| Upfront cash | Deposit 7,000 + 3 months’ rent 21,000 + agency fee 7,000 = 35,000 yuan (deposit refundable) | Down payment 900,000 + deed tax 30,000 + maintenance fund (e.g. 2%) 60,000 = 990,000 yuan |
| Monthly outflow | Rent 7,000 yuan | Loan payment 8,910 yuan (first month: interest 5,338, principal 3,572) + property fee 270 yuan |
| Non-recoverable cost | Rent 7,000 yuan | Interest 5,338 + property fee 270 + interest forgone on upfront cash 1,238 = 6,846 yuan |
| Tax effect | Rent deduction 1,500 a month → about 150 yuan | Mortgage interest deduction 1,000 a month → about 100 yuan |
| Net monthly cost (first month) | About 6,850 yuan | About 6,750 yuan (excluding price changes) |
All figures are illustrative. Principal repayments build equity and are excluded from cost; price changes, repairs and moving costs are not included. One-off costs such as the agency fee, deed tax and maintenance fund are not spread over the months either (for buying, only the interest forgone on upfront cash is counted).
Foreigners buying property
Under a 2015 notice from the housing ministry and others (Jianfang [2015] No. 122), foreigners working or studying in China may buy commercial housing for their own use as actually needed. In cities with purchase restrictions, local conditions apply, such as a period of social insurance or income tax payments.
Under 2010 rules (Jianfang [2010] No. 186), individual foreigners are generally limited to one home for their own residence (as of 2026, to be confirmed). A September 2025 notice from the State Administration of Foreign Exchange (Huifa [2025] No. 43) simplified banks’ handling of purchase payments, for example allowing conversion on the strength of the purchase contract first, but SAFE stated that eligibility to buy has not changed.
FAQ
What if the landlord will not return my deposit?
Under the Housing Rental Regulations, outside the cases agreed in the lease, the landlord may not deduct from the deposit without a justifiable reason. Keep the lease and photos or video of the flat’s condition; if talks fail, report to the local housing authority or the 12345 hotline, or use mediation or the courts.
Can I claim the rent deduction without lease registration?
The deduction is claimed by entering the lease details (landlord, address, period) in the app; registration is not a requirement. Keep the lease in case the tax office checks.
Can I pay the down payment from the housing fund?
Most cities let you withdraw the fund after buying to cover the purchase, and some let you use it directly for the down payment. Check your city housing fund centre’s rules.
Can foreigners claim the rent deduction?
Yes, if they are tax residents. But if you chose tax-free housing allowances from your employer, you cannot also claim the rent deduction.