Eggshell has been broken: what do you think and how to deal with the thunder storm in the long rental apartment?

category:Finance
 Eggshell has been broken: what do you think and how to deal with the thunder storm in the long rental apartment?


In August 2018, in Hangzhou, the capital of Internet finance, Dingjia network technology company announced that it was out of service, and more than 4000 tenants were in crisis. At that time, many people including the author pointed out the risk embeddedness of this business model. I love Hu Jinghui, the former vice president of my family, also predicted: the explosion of long-term rental apartments must be more severe than P2P thunderstorms. Later in the same year, similar incidents occurred in Shanghai and Beijing.

When the price war of long-term rental apartments is sweeping the housing market, tenants who rent houses without source are forced to choose this mode in the narrow market supply, praying that at least they will sign a contract with a large-scale enterprise like eggshell. However, the cruel reality is that big but down is more severe.

The business of long-term rental apartment was originally just an ordinary sublease business, which was grounded and had stable cash flow. Although the will of capital destroys the traditional one-to-one private rental market, it may not be meaningless. For example, unified and standard housing delivery and maintenance is realized, which reduces the risk of infringement caused by bad landlords or tenants who default on rent or deposit and damage the house; it centralizes the house supply and reduces the information search cost and negotiation cost when the owner and the tenant reach a transaction.

On this basis, if the real estate intermediary is only satisfied with earning the difference under the whole package mode or the intermediary service fee under the introduction mode, it can still be considered reasonable even if it makes the monetary income of the homeowner or tenant slightly reduced and the monetary cost slightly increased. After all, there is competition between real estate agents. The traditional one-to-one real estate leasing market also naturally exists, which will not lead to the real estate agency to squeeze the owners or tenants excessively.

However, due to the Internet financial thinking of the operators, the current mainstream long-term rental apartment model has transformed this traditional business model into a quasi financial model with high liabilities and high risks, which also makes the fracture of intermediary capital chain and thunderstorm become high probability events.

In this mode, the operators of long-term rental apartments focus on housing circle, which means that they can absorb more and faster funds and expand further as life instinct. This first led to its deep possession of funds on both sides of the homeowner and tenant. The commercial practice of the traditional rental market is pay in March, pledge in one month, which has relatively small capital risk for both parties. In long-term apartments, tenants are often required to pay half a years or a whole years rent in a lump sum. If they cant afford to pay, they need to accept loan products arranged by long-term rental apartments, such as eggshell rent loan. Homeowners have to get money every month. A large amount of funds are deposited in the long-term apartment operators. The annual rent or loan signed by a tenant can be used to meet the monthly rent of ten homeowners, and the short-term credit expansion is amazing.

Secondly, in order to seize the relatively scarce housing resources, long-term rental apartments subvert the basic commercial law of low rent in, high rent out. The implementation of the housing price is inevitable. At the same time, when their own market monopoly power is not enough to let tenants fully bear the transfer costs, or intend to create a cost-effective image to expand market share, they will in turn need to subsidize the price difference to rent out the house, thus turning the intention of making money into a loss business.

According to the prospectus of eggshell, from 2015 to 2019, the number of rooms operated by the company increased 166 times, and by the end of November 2019, the total number of operating apartments reached 432000. However, the financial report also shows that: in 2017, its revenue was 657 million yuan, with a net loss of 272 million yuan; in 2018, the revenue was 2.675 billion yuan, with a loss of 1.37 billion yuan; in 2019, the revenue was 7.129 billion yuan, with a loss of 3.447 billion yuan; in the first quarter of 2020, the loss was 1.231 billion yuan.

Although it is normal for the Internet industry that the long-term income can not offset the expenditure, the essence of the long-term rental apartment is a down-to-earth offline industry with a single profit return channel and a lack of added value growth point, so it does not have the imagination space of the real Internet industry. As a mature industry, this is not necessarily a disadvantage. However, we should bet on tomorrow with today, and risk other peoples money as a loan without interest, which will lead to long-term overspending of capital flow. Moreover, this kind of payment is not the independent burning money of Internet enterprise expansion, but the rigid expenditure that can not be stopped and the debt that has been legally confirmed. Its business model has become a Ponzi scheme and will encounter the retaliation of market rules.

Long term reset

Today, the model of long-term apartments must be reviewed. Some critics suggest that the funds for long-term apartments should be put into a special regulatory account. Naturally, this argument is reasonable, but in fact it can be implemented. There is no incentive for long-term apartments to collect so much money from the beginning. In other words, the essence of the capital heavy mode of the long-term rental apartment is not to prevent the default risk of the tenants, but to receive and pay short for a long time, through the rolling fund pool and reuse the funds. To deprive them of the right to use funds denies the innovation of their business model.

At least in the medium and short term, the regulatory authorities should take measures as soon as possible to make the long-term rental apartments return to normal according to the basic model of repeated game in the traditional market.

Among them, the most important thing is to prevent the debt risk of large amount of capital precipitation and misappropriation, and realize de financialization. In September this year, the Ministry of housing and construction housing rental regulations (Draft) proposed that the local government to implement housing rental funds, deposit supervision system. This is one of the reasons for the tight situation in the long-term apartment industry.

In addition, the draft also regards as high-risk business behavior that the rent paid to the owner of the house is higher than the rent collected by the lessee, and the period of collecting the rent from the lessee is longer than that of paying the rent to the owner of the house as high-risk operation behavior, and it is proposed that the real estate management department should include it in the list of abnormal operation. I think this idea is feasible, but the key point is not necessarily that the rent collection period must not exceed the rent payment cycle. For homeowners, the risk of capital deposition of rental agency paying rent on a quarterly or monthly basis remains to be studied. However, for the tenants, it should be clearly prohibited to collect the rent beyond the level of pay three guarantees one.

What should also be prohibited is that the long-term rent apartment directly requests or indirectly lures the tenants to accept loans from the long-term apartment and its related parties and partners, and bears long-term debts for more than three months at a time. This point is stated in the draft for comments that the housing leasing enterprise shall not require the lessee to use the housing rent loan by concealing, cheating, forcing, etc., shall not induce the lessee to use the housing rent loan in the name of rent preference, and shall not include the rent loan related content in the housing lease contract. After clarifying the relevant prohibition, not only can we set up reward reporting, but also if there is such behavior in long-term rental apartment, it is not harsh to investigate the relevant responsible person and take corresponding measures according to the understanding of illegal fund-raising in current law enforcement practice.

The above-mentioned capital restriction seems to limit the profit-making space of long-term apartments. In fact, it will enter the normal development mode because it is not good at financial games. In addition, effective regulation of long-term rental apartments can also start from the benign supply and demand of the whole rental market, including:

It is required that the listing information of rental agency and long-term rental apartment should be transparent, and the house listing for a certain period of time must be reduced according to a certain proportion. This is not anti market, because homeowners can still opt out of listing or renting their houses to specific intermediaries if they feel that the rent they have got is too low. Increase land for special rental housing. We will expand the construction of low-cost housing and public rental housing for low-income people and special talents, and increase subsidies for renting houses. The rental income of homeowners is exempted from income tax, and individuals who do not rely on rental agents and long-term rental apartments are encouraged to rent in sunshine.

The immediate aftermath

First of all, homeowners should respect the rights of tenants. The basic way of long-term apartment is to sublet the house. The agent rents from the owner and rents it to the tenant at a high price. Although the owner and the intermediary, the intermediary and the tenant are two relatively independent contract legal relations, but the owner knows and also allows the intermediary to sublease. Long term apartment should be regarded as a tripartite contract legal relationship. The rights of the sublessee, that is, the person who leases from the lessee, should be protected to a certain extent.

In fact, article 719 of the civil code passed this year also adds the subrogation right of sub lessees. That is to say, if the tenant feels that it is better to pay the rent owed to the owner instead of letting the owner drive out and pay another rent to rent the new house, so as to avoid the trouble of finding a house or moving house, the tenant has the right to choose to pay and continue to live on behalf of the tenant. At the same time, the tenant has the right to ask the intermediary to bear the rent that has been paid repeatedly. Moreover, the standard of rent arrears paid by the tenant on behalf of the intermediary should be in accordance with the original agreement between the intermediary and the owner. Homeowners cant ask tenants to sign up for a higher price.

Secondly, if the landlord evicts the tenant, he must at least explicitly give up and transfer the right to the subsequent rent. If the intermediary fails to pay the rent to the owner, it is of course in breach of contract. The owner of the house forcibly takes back the house, thinks that is reduces the loss, the relief right. However, in order to recover the house, the owner should claim to the intermediary the transaction cost loss caused by tossing at most, and should not continue to enjoy the right to collect subsequent rent. The owner should at least explicitly give up the right to follow-up rent and transfer this right to the tenant.

For ease of understanding, to give a simple example, the intermediary rents a house from the owner at a monthly rent of 5000 yuan and sublets it to the tenant at 6000 yuan. The intermediarys debt to the homeowner is 5000 yuan, and the debt to the tenant is to provide the house. If there is one month left in the lease term, the intermediary does not give the owner any money, the owner immediately forcibly takes back the house, and the owners loss is basically zero. The loss of tenants is double, that is, the empty house and property. Even if the tenant is eventually returned 6000 yuan of rent, it does not mean that the loss is made up. Because the tenants rights and interests are not only to live for a few months, to give a few months of rent, but to enjoy the right to live undisturbed within the agreed period. The loss of this residence period needs to be compensated by the tenants rent right transferred from the landlord.

Thirdly, from the perspective of legal interest, the weight of residence is more important than the right of rent collection. It has become a vicious social event for the owners of long-term apartments to expel tenants recklessly and even drive young women to the streets at night. Although the owner cant get the rent, its innocent. But obviously, the tenant is not the illegal party or the fault party. This is not a dispute between good and evil, but a balance of legal interests.

In contrast, if the right to collect rent and the right to live of the tenant are doomed to be temporarily sacrificed (of course, they still have the right to ask the intermediary to bear the ultimate responsibility), it should be the former rather than the latter who is sacrificed. When the homeowner and the tenant can not solve the problem by themselves, the public security organ should accept the tenants alarm for help and safeguard the tenants right of residence within the time limit. In fact, in developed countries with a high degree of legalization, it is very difficult to expel even those who are really in arrears with rent or mortgage. It is also a double violation of the right of residence of others property rights to change locks in a civilized way.

From the macro perspective of social cost sharing, the conclusion is that homeowners should be more risk-taking subjects than tenants. If the risk can not be resolved, then a basic task of modern social law is to allocate risk and transfer the risk from the subject that is more worthy of protection to the one who is more able to bear the risk.

In the big cities where long-term apartments are popular, those who can rent real estate generally belong to the rich or even the profit-making class. They have more financial strength to bear the losses and more ability to monitor long-term apartments. In fact, homeowners choose to contract the house to the intermediary rather than rent it directly to the tenant, which means that the owner should bear the risk brought by this indirect mode.

Self help of the industry

After P2P network loan enterprises have been thundering, other P2P leeks can console themselves with the assets involved in the company I invested in are different, and even there are risks in everything I invest. This kind of human nightmare of eviction is definitely not willing to risk the second time. Before this social pain heals, the public and government departments will have reason to look at long-term apartments with a high degree of distrust and take strict or even drastic measures. The key node of the survival of the industry is at this time.

In April and August 2018, AI apartment, a long-term rental apartment platform in Shanghai, broke its capital chain twice, and was finally acquired 100% equity by an asset management company for 130 million yuan. In addition to this equity model, other long-term apartments can also purchase the corresponding creditors rights from eggshell house owners by means of capital advance payment, so as to resolve the conflict between the homeowner and the tenant, and protect the tenants right to continue to live. By centralizing the related homeowners claims, other long-term apartments can not only accumulate new housing resources, but also claim claims to eggshells more efficiently than scattered homeowners. Even if the eggshell goes into bankruptcy liquidation, the unified creditor can also greatly reduce the coordination cost. Relevant competent departments and industry associations can also promote the realization of this process. Since financialization was once the original intention of long-term rental apartments, it is naturally an idea that can be discussed to imitate the takeover mode of financial institutions in crisis to save public confidence in the industry. (the author is an associate professor of the Central University of Finance and economics, special researcher of the management and innovation case research institute of the Economic Observer) source: Economic Observer Author: Miao Yinzhi, editor in charge: Zhong Qiming_ NF5619

In April and August 2018, AI apartment, a long-term rental apartment platform in Shanghai, broke its capital chain twice, and was finally acquired 100% equity by an asset management company for 130 million yuan. In addition to this equity model, other long-term apartments can also purchase the corresponding creditors rights from eggshell house owners by means of capital advance payment, so as to resolve the conflict between the homeowner and the tenant, and protect the tenants right to continue to live. By centralizing the related homeowners claims, other long-term apartments can not only accumulate new housing resources, but also claim claims to eggshells more efficiently than scattered homeowners. Even if the eggshell goes into bankruptcy liquidation, the unified creditor can also greatly reduce the coordination cost.