Okay, I found my Beijing dream apartment. We agreed on a price and my most important demand, a receipt – a formal fa piao that can be shown to the government as proof that I’m actually paying the rent. For arcane reasons, this fa piao is crucial, as it helps to lower my income tax.
Well, we had agreed on everything, and then the day before I’m supposed to sign I start getting text messages from my real estate agent: The landlord wants me to put down a two-month deposit and to pay three months’ rent up-front! And he won’t give me the fa piao – the greedy sucker doesn’t want to pay the tax (the receipt goes to the government, telling them the landlord is earning taxable income from his property).
Now the real estate agent is assuring me her company will print an official fa piao for me with the landlord’s name on it and that’ll work just fine. All I have to do is pay a couple hundred RMB to her (because they’ll have to pay it to the government in tax) and she’ll give me the monthly receipt. But my boss/friend, who’s been here about 15 years, tells me that’s bullshit and that if the government doesn’t honor it I’m shit out of luck the minute I sign the contract and I should walk away from the whole thing – a landlord who’s too sleazy to provide a receipt can’t be trusted, he says.
Damn. I really like the place, and I successfully negotiated the rent down to what I wanted. I don’t mind paying the small charge to the agent for the fa piao, but if I do that and then find out it’s worthless, I’m royally screwed. Is there an expert in the house who can advise? I have 17 hours before I meet the landlord to sign the lease….
Looking for an apartment in Beijing is a depressing affair. The real estate people make all their money from the commission and have zero incentive to help you get the lowest price. There’s gotta be a better way to find a place to live.
1
By Darin
What if you asked for the Fa Piao part to be included in the contract? If they’re actually planing on doing what they say they will, they shouldn’t resist including it. And that way if they don’t pull through, you can say they broke the contract, and move out of the place and it’s their problem. Right?
January 19, 2007 @ 9:35 pm | Comment
2
By richard
I did that at first, and they said it was okay. But then, the agent told me the owner had cold feet about it. She said she would put it in writing that she – the agent – would guaranteee me a fa piao, but that would be a separate document, not part of the contract. The landlord says he won’t sign the contract if he has to provide the fa piao. That’s why I’m so concerned – the agent can promise me, but if it’s not part of the official, formal contract does it matter? Can I do anything if her fa piao isn’t good? I don’t know…
January 19, 2007 @ 9:53 pm | Comment
3
By mingtian
Since you like the place, ask how much extra will it cost to include a signed receipt with the contract? If he doesn’t accept this suggestion, walk away, this man is no good. You will regret doing business with him in the future.
January 19, 2007 @ 10:22 pm | Comment
4
By richard
He will have nothing to do with writing a receipt, he says. “It’s too much trouble.” Even if I pay the tax that he would have to pay to the government. Nothing can ever be simple. Everybody wants to make some money off the books.
January 19, 2007 @ 10:27 pm | Comment
5
By kate
I’m a little confuse about what you mentioned (including in the contract etc), but I’ll share my experience here.
When I was in Shanghai (have to qualify this was Shanghai, and 2 years ago), what I did was to get my own fa piao.
I’d take 1-2 hours off work to go to the local tax branch office (they seem to always have one near enough to the xiao qu, but it’s opened strictly by their official hours, lunch time included). It’s not the main tax office, but a small little branch. It has to be the office in-charged of your area, I think. Your agent can advise you where, since they’re usually the ones who go running to get fa piao.
Pay 5% (or 7%, I can’t remember exactly) of the rental amount, give them the specific address of the apartment, and they’d issue me a fa piao on the spot.
I could get fa piao in advance (i.e. pay 5% of rental for the next 3 months), so I didn’t have to keep running to the tax office every month.
I suppose if you are willing to pay that extra 5%, this is an easier way out. I’m sure the tax amount saved is more than that 5% of rental, work your sums.
It was a pretty easy solution for me, besides the hassle of having to waste an hour or so every few months. I had no other way out because the agent who promised to regularly run the errand for me disappeared as soon as he got his commission.
The landlord only cared about rental collection. I doubt she even knew I had been paying taxes regularly on her behalf. Anyway, that is not important to her.
Also, the government does not care who pays the tax on rental. They’d be more than happy if the tax is actually paid, considering so many apartments are rented out and I doubt they chase after every landlord for taxes.
Hope this helps a wee bit.
January 19, 2007 @ 11:52 pm | Comment
6
By Raj
I would say, don’t let them screw you over. Demand the receipt up-front, or say you’ll walk away. It’s not even worth trying to come up with some dodgy-deal that might work. Safety first in my book!
I would also be suspicious about loads of rent up front – sounds like the landlord might want to get money out of you and then force you out. Say you’ll pay the normal deposit and then maybe have a compromise where you’d pay more, but not what they want now.
If they get tetchy, ask if it’s because you’re a foreigner and you think you’re going to be scammed. Just act like a Chinese person and raise all hell if they dig their heels in!
January 19, 2007 @ 11:59 pm | Comment
7
By THM
Richard, I’d take Raj’s advice. If the landlord is showing signs of being a sleaze this early, it’s only bound to get worse.
It’s been my experience that contracts involving a foreigner in China are only meant to protect the Chinese side of things. It may take you a little longer to find another apartment, but it will save you a lot of future grief.
Before coming to America, my wife was a Real Estate agent in Chengdu and basically she said the Real Estate Agents separate agreement with you wouldn’t be worth the paper it’s signed on.
January 20, 2007 @ 2:36 am | Comment
8
By nausicaa
Yup. Stick to your guns, Richard. It’s gotta be the right way or the highway.
January 20, 2007 @ 3:32 am | Comment
9
By JadeBJ
Hi Richard,
I’ve been through 8 landlords – yes 8 in 5 years, and here’s my advice. You will never get the fa piao in this situation from the landlord. Never. Once the landlord goes on the tax record, he’ll never get off, and he knows it. Agents are much worse than landlords and they will say anything to get you to sign the contract – this is stuff I’m sure you all know. My advice is to check out what kate said above or make a decision of a choosing a relatively cheap place (which I’m taking a wild guess is what you’re looking at) and using that to offset whatever you’re going to lose in taxes (which unless you’re making shitloads of rmb, ain’t going to be that much anyway). You can also chat up your finance dept and ask them what other kinds of fa piao they might accept if you can’t use a housing fa piao (there is ALWAYS a gray area here). Good luck and let me know if you want to rent my concrete shell penthouse down on the south 3rd Ring!
January 20, 2007 @ 6:57 am | Comment
10
By richard
Thanks for the great input. I think I know the best way for me to move from here; I’ll keep you posted.
January 20, 2007 @ 9:55 am | Comment
11
By Jerome Cole
Run away, Richard! I have had many, many painful experiences with Chinese landlords. This guy sounds like a sleaze and a loon. A bad landlord can disrupt your life in ways that you cannot imagine. Just find another place.
January 21, 2007 @ 12:51 am | Comment
12
By Bukko in Australia
If it’s this difficult to get a simple receipt, due to various angles for tax dodges and consumer ripoffs, what must it be like for more complex transactions like building a factory or arranging a shipment of goods? Amazing that a society with such a blatant disregard for anything coming close to the rule of law can function at any organised level.
January 21, 2007 @ 5:11 am | Comment
13
By Will
Jeez, Richard, if I have to move to Shanghai maybe you should rent my place in the same complex (although I’ll still be there for a couple of months and I think it’s bigger than you need). My landlord is fantastic and has not raised a peep about cutting me fa piao.
January 22, 2007 @ 9:28 am | Comment
14
By China Law Blog
Richard —
Sorry for my slowness on checking in — just saw your e-mail. I think you did the right thing by backing out. If you had rented from this guy, you would have been off the record, so to speak, and you would have been more at his mercy than he at yours (your not being Chinese and all. Don’t know Beijing’s apartment market, but there sure are plenty of good, available, and well-priced apartments in Shanghai. If Beijing is anything like Shanghai, move on.
January 22, 2007 @ 10:07 am | Comment
15
By Shanghai Slim
I’m not visiting PD so often lately, so my advice is stale, but for what it’s worth I throw my hat in with the “look at another apartment” chorus.
If this landlord can’t be bothered with the tax receipt, why should you be bothered with … five months rent up front?!!
If it’s “too much bother” for the landlord to get the fa piao, what do you think will happen the first time you have some problem with the apartment. “Sorry, can’t fix the shower, too inconvenient. I’ll send brother-in-law over with some duct tape next week.”
Keep looking and you will thank yourself later.
I’d also suggest not using an agent, you are just setting yourself up. Hit those streets in the neighborhoods you want to live in, and look at the ads posted outside the rental agencies yourself. It’s easy, you only need three or four Chinese words (“kitchen”, “bedroom”, etc). You can see the details of the place without some agent wasting your time hustling you around to grossly unsuitable (but expensive) apartments. And more importantly, you can see the price of the place before they see your white face. I have had much better luck with this method.
Good luck, Richard!
January 22, 2007 @ 11:37 pm | Comment