Nowhere to Call Home: COVID-19 Leaves Scars on China’s Booming Online Long-term Rental Industry

(Source: The Atlantic)

From owing a house to renting one, from “Dwelling Narrowness ” to “I Will Find You a Better Home“, these discussions on house-related topics often trend on China’s social media.

According to industrial data provided by Beike, impacted by the COVID-19 and stringent quarantine rules, the total volume of house renting in 18 Chinese cities slumped by 78.9% month-on-month and 82.7% year-on-year in February 2020, the number of available homes declined by 47% in the same period.

While research reveals that a small tide of renting in China will re-emerge moderately in April 2020, online long-term rental platforms seem trapped in a blame game.

Ziroom and Danke Apartment, China’s leading online rental brands, have faced public criticism since February as mounting complaints and allegations of bloated rental fees and mistreatment of tenants emerged amidst COVID-19. Though both platforms denounced these disputes and rolled out measures to assuage people’s fury, it will be hard for them to restore their reputations in the short term.

Young renters, many of whom are recent college graduates, on the other hand, have also been hurt by the pandemic and caught between the uncertainty of job-seeking, shifting quarantine regulations and soaring rental costs.

Complaints

Doubts and accusations against online long-term rental platforms seem to dominate the headlines every so often in China. Ziroom, which raised 4 billion yuan in its Series A funding in 2018 and faced a major formaldehyde problem the same year, is currently struggling through a new PR crisis.

Xiao Xue, a tenant of Ziroom based in Shanghai, decided to move out once COVID-19 ends in China.

In her case, Ziroom kept charging her both rent and service fees when she returned to her hometown for the Chinese New Year and stayed there for two months due to the travel restrictions.

“It is my obligation to pay the rent during my leave,” she said, “but I think it is unacceptable to pay the extra service fees since I did not request any services or management of my house in the two months.”

Other complaints have surfaced on BLACK CAT, a Sina-backed platform for consumers, with posters complaining that Ziroom increased their rent by 8% – 30%. Manny affected were forced to extend their contracts as it is hard for them to move out in virus-sieged cities in the short term.

Several complainants said that Ziroom addressed their concerns once they vented anger online. Yet, the negotiation process came to a standstill for lack of effective solutions.

Delayed Remedies

When China gradually lifted its lockdown and restarted economic operations, house-renting surged in demand for as a string of workers flew back to metropolises like Beijing and Shanghai.

Ziroom introduced remedial measures such as VR house searching, zero deposit contracts, and free house changing within 30 days to meet tenants’ demands.

It is reported that Ziroom injected more than a billion yuan to help settle tens of thousands of tenants in the epicenter of the outbreak, Wuhan, and upgrade its sterilizing system nationwide.

Experts noted that renters’ basic demand is to live in a comfortable high-quality house with security amid the pandemic. Ziroom needs to leverage its digital advantage and perfect its policy to accommodate the situation in order to surviving the crisis alongside with its tenants and gain social credits.

While rental platforms like Ziroom have issued multiple tactics to mitigate the impact of COVID-19, their factual implementation is sometimes inevitably limited by local communities which carried out China’s biggest social control campaigns in history with uniformed volunteers identifying every visitor and checking their Health Code at the entrance of residential compound.

There is a looming sentiment of boycotting non-local persons in big cities. A tenant said on Weibo that he was barred from returning to his rented house. The staff of Ziroom told him to communicate with the community personally.

Landowners

Online long-term rental platforms generally play the role of “second landlords” in the rental market. They sign agreements with numerous landlords to accumulate a sufficient housing resource, make slight renovations and then put these houses up for renting. They profit from the agency fees and other management fees.

Even though this online to offline (O2O) operation mode provides renters with a big variety of houses and helps landowners to reach more potential renters, the pandemic exposed the long-lasting absence of direct communication between renters and landowners and the asymmetries in information they receive from the platform.

Danke Apartment, another data-driven online long-term rental platform that was listed on New York Stock Exchange (NYSE) in January 2020, was allegedly forcibly evicting its tenants on grounds of contract-cancellation by the landowners.

A Beijing-based tenant surnamed Wang told Pandaily that she was informed by an agent of Danke Apartment that she had to move out of the house within seven days since the landowner didn’t want to rent out his house anymore.

“I connected to the landowner personally and she said that Danke Apartment did not notify him about the termination of her contract,” Wang added, “my landowner was so kind and told me I can keep renting his house.”

Although Danke Apartment reached out to Miss Wang two weeks later after she submitted her inquiry helping her solve her renting headache, she still advised against renting with the platform.

“You could rent a better house in good condition for an affordable price,” she said.

Young Renters

From small villages to densely-populated metropolises, young renters, striving for a better life, are struggling to rent satisfactory accommodation to relieve themselves of the hardships of urban work and life.

According to the research Big Data Report on Young Renters 2019 by Baletu, China’s rental market witnessed a steady increase with 80% of young people willing to rent with others to cut the budget. However, the unexpected pandemic has become an obstacle to room-sharing with tenants going through a 14-day quarantine or unable to leave their cities forced to give up on their contracts and making house search harder for young people.

Ziroom agents said they can provide new tenants with “wait-for-rent” houses if they need to isolate themselves if there are available houses.

“I found a suitable house via Ziroom and its staff told me that I could do my quarantine in it,” Yang, a college graduate studying in Beijing, said, “but days later, he told that the house had been rented out.”

Yang could not travel back to Beijing and is still looking for a new house.

“My university has shut down and graduate students are barred from returning to school to avoid the second wave of infection,” Yang told Pandaily, “while many companies are currently allowing interns to work from home, I think graduates may miss many opportunities if they are not based in Beijing since the economy in China is getting back to normal day by day and HRs are more likely to hire people who can do onsite work.”

As the graduation season is approaching, many graduates like Yang are trying to gauge the situation and hesitating about renting. Akin to migrating birds, they are looking for a place they can call home in these sealed cities.