Behind the Rising Vacancy Rates in Third- and Fourth-Tier Cities: Legal Risks and Countermeasures for Owners Who Prefer Vacancy over Renting
In recent years, the real estate market in third- and fourth-tier cities has continued to adjust, with some areas experiencing rising housing vacancy rates and a phenomenon where property owners prefer to leave their homes vacant rather than rent them out. This trend is gradually spreading to first- and second-tier cities, drawing widespread social attention. From a legal perspective, housing vacancy is not merely an economic issue but also involves multiple legal topics, including the protection of owners' rights and interests, property management responsibilities, and lease contract disputes. This article will analyze the legal risks behind housing vacancy from the perspective of lawyer practice and provide coping strategies for property owners.
The Legal Nature of Vacant Housing: Balancing Owners' Rights and Obligations
A house, as a significant property of its owner, has its rights to use, benefit from, and dispose of it protected by the Property Rights Section of the Civil Code. An owner's decision to leave a house vacant constitutes lawful control over their own property, which in principle is not subject to interference by law. However, vacancy does not come without a cost. According to Article 273 of the Civil Code, owners have rights to and bear obligations for the common areas of a building beyond their exclusive parts, and may not refuse to fulfill their obligations on the grounds of waiving their rights. This means that even if a house is vacant, the owner is still required to pay property management fees in accordance with the property service contract, because property services are primarily directed at the common areas, not at individual exclusive parts.
In judicial practice, cases where property service enterprises sue owners of vacant properties for the recovery of property management fees are not uncommon. Courts generally uphold the property company's claims, unless the property contract expressly stipulates that fees may be reduced or waived for vacant properties. For example, some regions have introduced policies allowing discounts on property fees for vacant properties, but owners must proactively apply and meet the relevant conditions. Lawyers remind that when purchasing a property or taking delivery of it, owners should carefully review the property service contract and understand the clauses concerning vacant property fees, so as to avoid passively bearing high costs.
Furthermore, vacant housing may also give rise to disputes over neighbor relations. If, due to long-term vacancy, water pipes age and leak, causing damage to neighbors, the owner shall bear tort liability in accordance with Article 1165 of the Civil Code. Therefore, vacancy is not a matter of "walking away"; owners still have maintenance obligations, or they may face legal claims.
The Motivations for Preferring Vacancy over Leasing and Hidden Risks in Lease Contracts
Owners often choose to leave properties vacant rather than rent them out, driven by practical considerations such as low rental yields, high tenant management costs, and concerns about property damage. This is particularly true in third- and fourth-tier cities, where rental income can hardly cover holding costs, and renting out may instead bring trouble. However, lawyers point out that renting out a property is not necessarily a "loss-making" endeavor; the key lies in contract design and risk prevention and control.
Lease relationships are governed by the Contract Book of the Civil Code. The owner, as the lessor, must ensure that the premises meet safe living standards. If the premises have defects, such as aging electrical circuits or gas leaks, resulting in personal injury to the tenant, the owner shall bear compensation liability in accordance with Article 708 of the Civil Code. In addition, if a tenant subleases without authorization, engages in group renting, or conducts illegal activities, and the owner fails to discover this in a timely manner, the owner may face administrative penalties or even criminal risks. For example, the Measures for the Administration of Commercial Housing Leasing stipulates that the lessor is required to register and file the lease; otherwise, a fine may be imposed.
Practical legal advice: if an owner is considering leasing the property, a written lease agreement should be signed to clearly specify terms such as rent payment, security deposit refund, maintenance responsibilities, and prohibition of subletting. At the same time, the property should be inspected regularly, and communication records should be retained to facilitate the presentation of evidence in the event of a dispute. As for concerns about low rental income, the owner may consider short-term leases or entrusting the property to a professional management agency to reduce management costs, rather than taking the one-size-fits-all approach of leaving the property vacant.
The Legal Costs of Vacant Properties: A Dual Consideration of Taxes and Responsibilities
Vacant housing may seem "worry-free," but in reality it carries hidden legal costs. First, the property tax reform pilot has been expanded, with Shanghai, Chongqing and other cities already levying property tax on vacant homes, and this may be extended nationwide in the future. According to the Interim Regulations on Property Tax, vacant homes do not fall within the scope of tax exemption, and property owners are required to file and pay taxes in accordance with the law. If filing is neglected, they may face late fees and fines.
Secondly, vacant properties may lose the right to rental income, which is particularly evident in divorce property division or inheritance disputes. For example, if a jointly owned marital property is left vacant and one party claims division of income based on market rental rates, the court may, pursuant to Article 1087 of the Civil Code, taking into account the actual use of the property, order one party to compensate the other for rental losses. Lawyers remind that vacancy is not "zero cost"—in property disputes, it may be deemed as "negligence in exercising rights," resulting in damage to one's interests.
Additionally, if a vacant property is subject to theft, robbery, or fire, owners may file claims with their insurance company, but if they are uninsured or underinsured, they bear the losses themselves. Lawyers advise that owners may purchase household property insurance to cover vacancy risks, while regularly inspecting the property for safety to avoid incurring additional liability due to negligent management.
Urban Sprawl Trends in Major Cities: How Property Owners Can Use Legal Tools to Break the Deadlock
As vacancy spreads to major cities, property owners face a more complex legal environment. Rental demand is strong in major cities, but vacant properties may be difficult to lease due to information asymmetry or excessively high rental expectations. Lawyers believe that property owners should proactively utilize legal tools to maximize asset value.
First, improve lease contracts. Refer to the Ministry of Housing and Urban-Rural Development's "Model Text for Housing Lease Contracts" to clearly define rent adjustment mechanisms, property repair responsibilities, and breach of contract clauses, thereby reducing the likelihood of disputes. Second, utilize dispute resolution mechanisms. If a tenant defaults on rent or damages the property, the owner may terminate the contract pursuant to Article 722 of the Civil Code and seek recovery through litigation or arbitration, rather than passively leaving the property vacant. Third, pay attention to policy incentives. Some cities offer tax benefits for long-term rental apartments and affordable rental housing. Owners may entrust operations to compliant institutions to reduce holding costs.
Attorney's special notice: property owners should consult a professional lawyer before making decisions to evaluate the pros and cons of renting, selling, or leaving a property vacant. Guangdong Zhiming Law Firm has long handled property disputes and has represented multiple cases involving disputes over property management fees for vacant properties and lease contract disputes, accumulating rich practical experience. We recommend that property owners develop personalized property management plans based on their own circumstances to avoid falling into a legally passive position due to a "prefer vacancy over renting" approach.
Property vacancy is a market phenomenon, but it is also a legal issue. When exercising property rights, owners must balance rights and obligations and make good use of legal tools to mitigate risks. If you are facing similar concerns, please feel free to contact Guangdong Zhiming Law Firm. We will provide you with professional legal support to help ensure the safety and appreciation of your property.
