Controlling rental prices while eliminating overcrowding

It is reported that, starting in December, Beijing will investigate the problem of the illegal group renting of living accommodation, with the aim of eliminating the practice next year. As we consider the safety issues of overcrowded rental accommodation, we should also take care not to push up the cost of rental accommodation, as higher rents will have a negative affect on many renters in the city, says an article in The Beijing News (excerpts below):

A regulation that took effect in July says tenants living in rental accommodation should enjoy no less than 5 square meters per person and there should be no more than two people living in a single room.

It is necessary to strengthen the management of rental accommodation because illegal property-sharing arrangements can lead to various hidden hazards.

However, if we consider the issue in an economic perspective, such changes in management could also lead to knock-on effects for rent levels. Eliminating group renting will force many people to pay higher rents in Beijing, driving an increase in the cost of rent to meet the rigid demands. Such increases could even be passed on to property prices.

Also, with the rental prices going up, some low-income groups who are quite sensitive to the rent levels may be forced to leave Beijing or find a better-paid job, which will indirectly push up salary levels in the city and finally drive up prices of basic services and products.

Therefore, while strengthening the management of shared renting, the government should also take into account the knock-on effect of price increases. As well as eliminating illegal group renting, the government should provide more low-rent housing.