Long rental apartment "life and death door": stop "rent loan" test viability

Long rental apartment

Original title: long rental apartment "life and Death Gate"

Author: Zhang Xiaolan

Following the "thunder explosion" in August in Hangzhou, two more parents recently rented apartment capital chain was broken, including Lei Jun's favorite Shanghai apartment and Changsha's "coffee cat". At the same time, Beijing, Shanghai, Zhejiang and other provinces and municipalities have launched the supervision of rental lending business, many banks have also stopped the "rental lending" business. What impact will the suspension of rental loans have on long-term apartments? How can long-term apartments strike a balance between capital security and scale expansion?

Halting "rent loan" to test viability

"Suddenly stop the rent loan, not much cash reserves, it is normal to see the fall." According to the industry close to apartments, apartments because of poor management level, low rental rate, operating level is difficult to achieve profits, resulting in a large loss gap, it is also difficult to attract new equity investment. In this context, in recent two months, the relevant departments to strengthen supervision, some financial institutions have withdrawn, called for the suspension of "rental loans", resulting in a break in the amount of money.

"In the last two months, many rental products have been suspended in the market. For some apartment enterprises that are more dependent on financial products, they face greater cash flow challenges. The industry insiders said.

This statement has been confirmed in many industry circles. This reporter has learned that some banks have pressed the "pause key" to the housing loan business. "If the project is proprietary and can operate rental loans, if not, some financial institutions have stopped rental loans." Panda apartment CEO Wang Xilong told reporters.

"The result of the feedback from the business sector is that we are indeed suspended. There is no clear requirement for regulation and there is no need to continue this kind of business on the cusp of the storm," the newspaper quoted bankers as saying. However, there is no clear regulatory directive to suspend loans involving rental housing.

"Lei Lei's apartment business is just beginning." Liu Xiang, founder of Youkeyijia, told reporters that from the fourth quarter of this year to the first quarter of next year, it is the "dark moment" of long-term apartment rental. Under the background of macroeconomic de-leveraging, there is no new financial products. Once the rental phasing is stopped, the apartment enterprises will play a "lending" effect, which will test the anti-volatility of long-term apartment rental, financing capacity. And viability.

"Storytelling, highly dependent on financial products, will fall first. Return to the nature of business, focus on business, financial model is relatively healthy, cost control enterprises can survive. Liu Xiang said.

"Finance is a tool to achieve the growth of enterprises, not an end, those who use financial means to circle money for the purpose of ignoring products, services, refined operations and other inversion of the bottom line operators, accident is certainly inevitable." Zhang Peng, executive director and President of Contemporary Property (China) Co., Ltd., said that the operators without a good business model and strong operational capacity will be eliminated, which is also the process of industry standardization.

More regulation to control rent loans

In fact, for the "rental loan" business, although the regulatory authorities have not yet received a clear directive document, but this year, the relevant cities have carried out risk warning and regulatory norms.

As early as August 17, the Beijing Municipal Construction and Residence Commission, the Municipal Banking Supervision Bureau, the Municipal Finance Bureau, the Municipal Taxation Bureau and other departments focused on interviewing the leaders of major housing rental enterprises, such as free, apartment, eggshell apartment, explicitly demanding that housing rental enterprises "three must not" and "three strict checks", including the use of bank loans and other financing channels. In addition, the use of financing funds not in accordance with the agreed purposes will be strictly checked. On August 23, the Beijing Municipal Committee for Residential Construction reiterated that in view of the illegal use of "rental loans" by housing rental enterprises, it is investigating and collecting evidence in conjunction with the Municipal Banking Regulatory Bureau, the Municipal Financial Bureau and the Municipal Taxation Bureau. Once verified, it will be heavily punished and punished jointly. In addition, Shenzhen and Shanghai also issued relevant documents to strengthen the supervision of "rent loan".

On October 19, Zhejiang Province issued a document requiring long-term rental apartment enterprises engaged in residential housing entrusted rental business not to start their own "rental loans" and other financial business, not to cooperate with non-qualified institutions to carry out "rental loans" and other business, not to induce lessees to sign "rental loans" agreements, not to be leased. People provide guarantees and other credit enhancement measures. In addition, Shanghai and Shenzhen also issued relevant documents to strengthen the supervision of "rent loan".

However, these guidelines still lack specific landing plan. Mr. Yuan Chengjian, Vice President of Zhuge Xiangfang, believes that the competent government departments should establish the registration of rental information as soon as possible and strengthen the supervision of long-term apartment companies. If possible, a rent reserve system can be established to prevent the operation problems of long-term apartment companies, and the interests of the tenants and the owners who sign the lease contracts with them can be guaranteed a certain amount of work. The degree of security can also solve the problem of transition time. In addition, the financial regulatory agencies for the leasing industry financial products financing subject, credit subject, term, collateral, etc. to avoid excessive financialization.

Liu Xiang suggested that once the long-term rental apartment exploded, the government departments came out to coordinate, the main debtor from the tenant to operators or enterprises, into corporate debt. "Within the contract signed by the apartment operator and the financial institution, the apartment operator itself has signed a joint and several liability for repayment guarantees, which means that, as long as the tenant and the apartment operator terminate the lease relationship, there is no need to assume the obligation to continue repayment, and the apartment operator can pay for it. This will reduce the problem of people's livelihood caused by the long rental apartment's "burst warehouse".

"Rent loan" as a weapon for expansion of enterprises?

Why was the rental loan, which had been favored and widely used by long-term apartments, pushed into an embarrassing position of being questioned?

As a new form of business, long-Rent apartments are facing the problems of large initial investment, long payback period and difficult short-term profit. Previously, in many favorable policies, many "second landlords" from the asset management, financial perspective to operate apartments. However, since 2018, domestic banks have tightened their lending to the real estate business. In terms of debt issuance, long-term lease enterprises are mainly enterprises with real estate background, but not those with real estate background. Even the issuance of ABS (asset-backed securities) or REITs-like products is rare.

In addition, with the new regulations prohibiting term mismatches and "asset pool" operations, according to China Finance Network products show that most of the recently issued financial products are less than one year old, these special bonds and asset securitization products are not liquidity-intensive, and the term is often 3-7 years, if you want to successfully issue, you still need to raise interest rates. It is bound to push up financial costs. On this basis, "rental loans" emerged and widely used to support enterprises to withdraw funds and scale expansion.

Reporters learned that, including apartments, long-term rental apartments to the landlord to pay rent generally take monthly or quarterly payments, and 1-2 months deposit. When renting a house to a tenant, the apartment will advise the tenant to borrow money from the financial company, which will then pay the annual rent to the apartment, and the tenant will have to pay the financial company on schedule.

Industry insiders to Beijing 4th Ring a single room for example, the decoration cost of pre-apartment enterprises is generally between 7000-13000 yuan, 1-2 months later, the single rental, assuming that the rent is 3000 yuan / month, of which about 600 yuan belongs to the apartment enterprise, 2400 yuan belongs to the landlord, but through the "rental loan" way, apartment The enterprise can deposit 28000 yuan rent for 1 years, if the lease is 2 years, it will be 56000 yuan. This means that cash flow will be sustainable as long as high-speed growth is maintained.

"Short debt and long investment", the risk of capital appears

Although the "rental loan" is widely criticized by the outside world, it can objectively let operators, tenants, financial enterprises tripartite profit. Especially for tenants, it can be converted from monthly payment to monthly payment without interest. The principle behind this is that apartment operators usually help tenants to pay for the cost of phased products.

"Logically speaking, rental loans are reasonable, legitimate and compliant. Rental loans are made on the basis of personal credit. Although loans are made to enterprises or second landlords, second landlords have contracts and cash flows, which are much more reliable than consumer loans." Wang Xilong said.

However, long-term rental apartments usually standardize the renovation of the house before renting, which results in a large amount of pre-cost input, which normally takes three or four years to pay back. However, in the absence of long-term loans in the industry, matching financial products support, apartment enterprises will operate a "rental loan" way to recover capital, but rent can only support the cost of a year or two, therefore, there is also a "short-term debt long-term investment" of the capital risk.

A person in charge of a long-Rent apartment said that the rational and legal use of financial instruments to reduce tenants rental pressure is a good intention. But we should pay attention to two basic points: first, whether to clearly inform the tenant is a loan behavior, and for the tenant to choose independently; second, to have a wind control mechanism. Some experts suggest that financial penetration control is less than 30%, and the risk of enterprise operation is relatively controllable.

So, once the stop of "rental loans", what impact will have on long-term apartments? In this regard, Wang Xilong pointed out that the impact on the centralized apartments is not big, on the decentralized apartments, will have a greater impact, will lead to industry oligarchy. In addition, due to the supervision of funds, the pace of closing enterprises will slow down, resulting in a reduction in supply.

Another insider also believes that long-term rental apartments will quickly "lose blood" without other sustainable financial products. Among them, high-rent, large-volume, more than 90% of the contract cycle is two-year, leveraged enterprises have the greatest risk.

Suppose the tenant signs a two-year contract with the long-term apartment and withdraws the rent after April. According to the agreement between the financial institution and the apartment enterprise, the apartment enterprise should temporarily return the remaining 20 months rent to the financial institution once and for all. Financial firms can pay another 24-month rent to apartment companies, which gives them the ability to compensate for the last advance payment. Once the "rental loans" call off, when there is not enough new rental housing, not enough advance receipts, there will be accelerated repayment phenomenon, thus endangering the safety of funds.

Scale top? Look for healthy operation mode.

The successive cases of "thunder explosion" have also cast a shadow on the development of the whole long-Rent apartment industry. Some people in the industry worry that the size of the long rental apartment has reached its peak.

Wang Xilong said that the pace of expansion of long rental apartments will slow down, but it will not stop. Zhang Peng also holds a negative attitude toward this. "The whole scale of the industry is far from the top, and there is still a great potential for development in the future."

Zhang Peng also pointed out that long-Rent apartment operators can expand their scale with the help of financial capital, but the premise is to have a healthy business model, profitability and strict control of debt ratio, the risk is within the scope of the enterprise can bear.

Not long ago, Liu Hongyu, director of the Real Estate Research Institute of Tsinghua University, pointed out in public.

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