Dubious housing agencies that collude with online lending platforms to deceive renters and sign them up for loans are being investigated by the Beijing government, following a Monday exposé by The Beijing News.
In China, it is common practice to pay four months’ rent — a deposit plus the first three months — upon signing a housing contract. But this is often more cash than young renters, especially those in major hubs like Beijing, Shanghai, and Shenzhen, have available.
Enter unscrupulous housing agents who present the prospective tenant with an alternative: Agree to pay through a special online platform, and have the down payment reduced to just a deposit and the first month.
“The agency never told me it was a loan,” one tenant told The Beijing News, after having his national ID card photographed by an agency and turned over to Huirendai.cn, an online lending platform, in November of last year. When the tenant logged on to Huirendai’s app to pay the second month’s rent, he was shocked to find a loan taken out in his name for 22,000 yuan ($3,450) — the total amount owed for the rest of the year.
“I thought the app was developed by the [real estate] company as a convenient way for tenants to pay their rent,” he said. A customer service representative for the loan platform later told him that if he was more than 15 days late in paying, he could have his credit score docked.
In December, another agency that had acquired the renter’s original agency called to inform him that he would have to sign a new rental agreement — and this time, he would have to submit rent payments via a different online lending platform, Ybejia.com.
“The agent said I had to register with Ybejia.com first, and then have the loans on Huirendai.cn canceled later,” he recalled. Feeling uncomfortable with these strange new conditions, he requested that his contract be terminated.
Li Beike, the founder of a public account on social app WeChat that specializes in property rentals, told The Beijing News that housing agencies are able to secure huge amounts of capital by cooperating with lending platforms. The agencies receive the total rent for the entirety of the contract, and the lending platforms then collect from tenants on a monthly basis, with interest where applicable. Ybejia, for example, charges just a small fraction of a yuan per day for late payments. According to Li, this mutually beneficial arrangement allows the agencies to explore acquisitions of smaller competitors and the lending platforms to expand their user bases.
“It’s a win-win strategy for both the agencies and the [loan] platforms, but all the risks are on the vulnerable tenants,” Li said.
Huirendai.cn, meanwhile, believes the scheme is a win for everyone involved, telling The Beijing News that renters, too, benefit from not having to pay so much up-front. In addition, the company said that it calls applicants to confirm loans before they are issued, and that it does not proceed in situations where the potential lenders are unaware of what they’re agreeing to.
“We’d like to remind tenants to read any relevant contracts so that they can decide whether to pay their rent in installments,” a Huirendai.cn employee told The Beijing News.
“This is a form of civil fraud, where real estate agents use misleading tactics to push loan apps under false pretenses,” Wang Changqing, a lawyer at Beijing Zeyong Law Offices, told The Beijing News. If property agencies fabricate or conceal the facts in order to secure tenants’ loans up to a certain amount, he added, then they may be violating criminal law and guilty of contract fraud.
As for the lending platforms, Wang commented, they are obliged to inform the tenants of the risks involved, or they could bear legal responsibility. The tenants, too, have a responsibility to check the terms of their rental agreements carefully, said the lawyer.
Unscrupulous lending agencies have long been a scourge to Beijing’s property market. In April, the city’s housing and urban-rural development commission released two lists of disreputable housing agencies — 45 in total — known to engage in underhanded financial activity.
Editor: David Paulk.
(Header image: A man examines rental postings along a wall in Shenzhen, Guangdong province, Sept. 30, 2017. Ruan Chuanju/VCG)