A LOCAL long-term apartment rental operator is under investigation by Longgang police on suspicion of contract fraud, oeeee.com reported yesterday.

The case gradually surfaced when several landlords in Shenzhen reported to the police that Shenzhen Yuyi Property Management Co. Ltd., a third-party apartment rental operator, had failed to pay multiple sets of rent on time and could not be reached.

The company is reported to have required tenants to pay a large amount of rent in advance and then exeutives vanished with tenants’ rent and deposits after amassing a substantial sum of money.

In recent months, a large number of long-term apartment rental operators have gone bankrupt.

These apartment rental companies usually rent apartments from landlords at above-market prices, sign long-term leases – usually years – with landlords, renovate the apartments and then sublet them to tenants with a lower rent. These platforms’ profits are supposed to come from the premiums they charge tenants.

Under this model, both the landlord and tenant sign separate leases with the rental companies without meeting each other in person.

A woman surnamed Cheng has a single apartment in Luohu District. On Aug. 1 this year, she signed a lease with Shenzhen Yuyi Property Management Co. Ltd. However, in less than a month, she received the news that the company was mired in capital chain rupture.

According to the separate leases, the company should pay 2,700 yuan (US$394) in rent to Cheng every month. But the tenant of Cheng’s apartment, a man surnamed Gao, rented the apartment for just 1,600 yuan a month from the company.

“At that time, the company staff said that I could only enjoy the low price by paying a full-year rent in advance, so I paid more than 20,000 yuan for one year,” Gao was quoted as saying.

Gao said that he couldn’t get in touch with the staff member a week after he moved in, and he wasn’t able to reach the landlord until Cheng came to the apartment in person.

According to information from the database query platform Tianyancha.com, Shenzhen Yuyi Property Management Co. Ltd. was established May 13, 2020, with a registered capital of 1 million yuan.

Furthermore, the firm’s parent company, Shanghai Yuyi Property Management Co. Ltd., is also under investigation for contract fraud.

(Zhang Yu)