The City of Guangzhou released a groundbreaking housing policy on Monday giving certain property renters the same rights as owners – allowing them to enroll their children in nearby schools, while also potentially cutting back on property speculation.
School-age children with local residency, known as hukou in China, or those whose parents hold “talent green cards” issued by the Guangzhou government, will be able to enroll in elementary, secondary and high schools in neighborhoods where they rent property.
The new policy also enables migrant workers who meet the conditions of a points-based enrollment system to put their children into schools simply by renting a house in the same district. Previously, they had been blocked from enrolling because they didn’t have hukou for the area.
In China, access to the nine-year compulsory education system is subject to hukou and caters to property owners. School admission is usually granted to children of families who own property and possess hukou in the same area. So parents who want their children to get into better schools had to purchase housing in the same area. This education-based investment led to speculation in the property market, driving up housing prices in major cities.
“Once renters are given the same rights as owners, not everyone will have to buy a house,” said Huang Tao, general manager at the Guangdong Centaline Property Agency, in an article run by Caixin. “Some people will turn to the rental market.”
Though the change in policy may not lead to a sudden drop in housing prices, analysts believe promoting the rental market will support the central government’s effort to cut back on property speculation.
The move comes with other measures to encourage the rental market, including a tax cut on rental income and an increase of land supply to build more rental housing. The policy change marks the first time a local government in China has acted to boost the rights and interests of tenants in such concrete terms.
According to Homelink Research, China’s rental market will enter an upward period in the following five to 10 years. Market volume is expected to reach 1.6 trillion yuan (about US$237 billion) by 2020, top 2.9 trillion yuan by 2025 and exceed 4 trillion yuan by 2030.