Panacea or Pandora's Box? An institutional analysis of the contested long-term rental apartments development in China

Abstract

The dramatic growth of long-term rental apartments (LRAs) in China's megacities since 2015, spurred by a series of state policies encouraging the development of the private rental sector (PRS), has culminated in many LRA firms encountering capital chain rupture and even going bankrupt within a short period. As a result, thousands of tenants were rendered homeless and many property owners were left unpaid. The present study analyses the boom and bust of LRA development in China under housing financialisation and explores the relationship between the transformative institutions – characterised by policy deregulation/re-regulation – and market performance stimulated by capital speculation. The findings of this study reveal the institutional changes in China's PRS to have been closely linked to the socio-economic changes emanated from endogenous opportunism and exogenous shocks. Specifically, the policy drift in the PRS was closely associated with deregulation and capital speculation, while policy layering was employed to institutionalise, regulate and legalise the PRS, thus mitigating the housing shortage crisis and ensuring the retention of social stability. Adapting to the volatile politico-economic circumstances as a form of punctuated equilibrium, policies governing the PRS require constant assessment and reflection to safeguard people's basic housing rights.