Local authorities in Shanghai have cracked down on a real estate agency that organized downtown group rentals for expats, officials said yesterday.
The Caojiadu Subdistrict had asked the agency named We-work to cease group renting and restore the structures of its apartments that had been subdivided, an official said.
The wholly owned subsidiary of a Hong Kong company that described itself as the city's "largest shared flat provider, targeting foreigners staying short-term in Shanghai" owns more than 200 apartments for rent in downtown districts, according to its website.
Among them, 19 apartments had been found to have been illegally subdivided and rented to foreign tenants, the city's housing management authority said yesterday.
The authority had issued a warning to the legal representative, a US entrepreneur from Chicago, and had ordered the agency to restore all the illegal apartments within a week, an official with the authority said.
The agency admitted some of its apartments had been over-divided for renting, Yu Shunwen, a senior supervisor with the agency, told the housing authority. Two apartments had been rectified yesterday.
According to the city's regulation on the management of residential leasing, a room can be rented to at most two people, and the per-capita living area must exceed 5 square meters. Otherwise, it will be defined as illegal group rental because it poses a much greater safety risk.
Some local residents have complained that neighboring apartments owned by the agency were divided into many small rooms by the use of wooden boards or cupboards and then rented to foreign tenants, usually students studying at local universities.
"The apartments are easily divided so that they can be restored to original states quickly to pass the examinations from the authorities," a resident surnamed Huang said.
In one of the apartments on Wuding Road W., the bathroom was turned into a quasi bedroom by placing a bed beside the toilet and bath. A kitchen with multiple pipes on the ceiling had been converted into a bedroom.
According to the regulation, landlords violating the rules must immediately rectify the situation and those that refuse can be fined up to 100,000 yuan ($15,000). They will also have the offenses noted on their personal credit records.
Meanwhile, the agency organizing group rentals can be suspended and fined by up to 100,000 yuan, regulations say.
Group rentals are a popular way to minimize living expenses, but until recently expats have not usually been involved. However, with Shanghai's surging housing prices and a lack of short-term apartments for rent, many foreign residents who stay in the city for only a few months at a time often prefer to rent shared apartments.
On numerous apartment renting websites targeting foreigners, such as Smart Shanghai, a shared flat is offered for about 3,500 yuan per month. Expats had also been complaining about the city's surging rents in recent years while the subsidies from their companies or universities had barely risen, said Yan Yan, a senior local real estate agent.
