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Recently, Chongqing issued a document stipulating the charging standards for residential property fees in the central urban area, stipulating that the maximum property service fee for residential buildings with elevators is 1.9 yuan/square meter/month. Based on this, a large number of communities have applied to reduce the current high property fees. On the other hand, some old communities have encountered property management companies withdrawing because the property fees are too low.

A recent investigation by a reporter from the China Times found that the property management fee for the 30-year-old Shuangyu East District community in Shunyi, Beijing, is only 0.53 yuan per square meter per month. The property management company of the community, Beijing Dalong Property Management Co., Ltd. (hereinafter referred to as "Dalong Property"), announced that due to the low property management fees and years of losses, it is unsustainable and announced that it will withdraw from the community property management in the near future.

The relevant staff of the Dalong Property Project Department said that Dalong Property followed the normal withdrawal procedures. The staff of Shuangyu East District Community said that after Dalong Property withdrew from Shuangyu East District, there would definitely be new property companies entering the site, and several property companies are currently being evaluated.

Faced with the game between property owners and property management companies, many parties in the industry have discussed the charging standards and collection rates of property fees, pointing out that old residential areas have few facilities and even if the community is large, a property fee of 0.5 cents per square meter can only barely maintain business operations, and the company really cannot make much money; replacement of property in old residential areas is already very common; the pricing of property fees should be clearer to effectively avoid wrangling between property management companies and owners; property management companies need to maintain a collection rate of more than 85% for property fees and promote a positive cycle of property management with high-quality services.

Withdrawal of property management from old residential area

Shuangyu East District, also known as Shuangyu Community, is one of the earliest commercial housing communities located in the Houshayu area of ​​Shunyi District, Beijing. It was built in 1994 and is nearly 30 years old. According to the housing information on Beike.com, Shuangyu East District is a slab building with 15 buildings and a total of 1,050 households. The area of ​​the houses on sale is mostly 70 to 80 square meters.

It is worth noting that the property management fee in this community is as low as 0.53 yuan/square meter/month, which is much lower than the property management fee standards of several yuan for new houses, and also lower than the property management fee standards of most second-hand housing communities.

Recently, the property management company of the community announced its withdrawal because of its low charging standards. During the on-site visit to Shuangyu East District, the reporter noticed that "property withdrawal notices" signed by Dalong Property were posted at the gate of the community and on the walls of the entrances to the unit buildings. It mentioned that due to the low property management fees of the community and the continuous increase in human and material costs, the company has suffered losses year after year and is difficult to maintain. According to relevant regulations, Dalong Property decided to officially withdraw from the property management service work of Shuangyu East District on September 1, 2024.

Dazhi, who works as a community governance consultant, told the China Times reporter that old residential areas have few equipment and facilities. Even if the community is large, the property management fee of 0.5 cents per square meter can only barely maintain operations. Companies really cannot make much money and may have previously just wanted to support a team.

In order to further understand the situation, the reporter called the Dalong Property Management Company monitored by Tianyancha. After the call was connected, the relevant staff told the reporter of China Times that they were only the logistics office staff of Dalong Property Management Company and did not know the specific situation. They needed to call the project department to understand the specific situation. The relevant staff of the Dalong Property Management Company project department said that Dalong Property Management Company followed the normal withdrawal procedures, but did not give much explanation for the specific reasons for the withdrawal.

According to Article 75 of the Beijing Property Management Regulations, six months before the expiration of the property service contract, the owners' committee or property management committee shall organize the owners to jointly decide whether to renew or hire a new property service provider, and notify the original property service provider of the decision in writing. If the property service provider does not accept the renewal, it shall notify the owners' committee or property management committee in writing 90 days in advance. During the continuation of the rights and obligations of the contract, if either party proposes to terminate the contract, it shall notify the other party in writing 60 days in advance.

In Beijing's second-hand housing market, the property management fees of many old residential areas are all below 1 yuan per square meter per month. According to the listing information on Beike.com, the property management fee standard of the residential area in Shunyi Dongxing District 2 is 0.5 to 0.55 yuan per square meter per month, the property management fee standard of Chaoyang District Maizidian Street is 0.6 yuan per square meter per month, the property management fee standard of Tongzhou Lihuayuan is 0.8 yuan per square meter per month, and the property management fee standard of Daxing Shuanghe Beili is 0.5 to 0.8 yuan per square meter per month.

"It is very common for old communities to change property management now," a staff member of Shuangyu East District community told the China Times reporter. During the visit, the reporter learned through consulting relevant staff that Shuangyu Garden East District, next to Shuangyu East District, also changed its property management company last year.

How are the standards set and how are the fees charged?

As of now, there is only half a month left before Dalong Property Management announces its withdrawal from Shuangyu East District. The above-mentioned community staff revealed to reporters that after Dalong Property Management withdraws from Shuangyu East District, there will definitely be new property management companies entering the market, and several property management companies are currently being evaluated. If it is not finalized within the deadline, Dalong Property Management will still need to serve until the new property management company enters the market, and there will be no gap in the property management of the community. As for whether the property management fee will increase on the basis of 0.53 yuan/square meter/month, it is still uncertain.

In 2010, Beijing issued the residential property service standards. The property fees of residential communities are no longer charged in full according to the housing area, and residential property services are divided into five levels. At the end of last year, Beijing promulgated the "Beijing Residential Project Property Service Compliance Manual 2023 Edition" to clarify the regulatory rules and standards that property service companies should abide by in their business activities, and to indicate the risks of violations and legal responsibilities, providing a basis for standardized property services.

"The relevant regulations on property management in Beijing do not specify in detail the property charging standards for different levels. At present, Beijing's property fee charging standards mostly invite third-party companies to evaluate, calculate and confirm based on the project's own circumstances and operating costs, and refer to the property fee standards of the same region, category and quality." Dazhi explained.

In an interview with a reporter from the China Times, Wang Yuchen, director of Beijing Jinsu Law Firm, said that, under the premise of complying with legal provisions, reasonable property charging standards need to seek a balance between owner needs and service levels, owner payment ability and company interest protection, thereby forming a virtuous circle between meeting community management needs and ensuring company profits, and promoting the long-term development of the property service market.

"Regarding the level of property management fees, the property management and owners of the community often have different views, and this contradiction is common across the country." Yan Yuejin, deputy director of Shanghai E-House Real Estate Research Institute, told the reporter of China Times that the pricing of property management fees needs to be more clear at the local level. If the standards are listed, the two sides will not have to argue. At the same time, the current property management can try to outsource some of the business more flexibly while maintaining the original community management structure, introduce liquid property management companies, and do irregular management.

The reporter noticed that in November 2023, Guangzhou also issued new regulations on property fees, with the maximum initial property service fee for residential first-level properties not exceeding 2.8 yuan/square meter/month. On June 1, 2024, Chongqing officially implemented the "Chongqing Property Service Fee Management Measures", with the maximum initial property service fee being 1.9 yuan/square meter/month. Based on this, a large number of communities have called for a reduction in the current property fee standard of more than "1.9 yuan".

In addition to the low standard of property management fees, are there other reasons for Dalong Property's withdrawal? The above-mentioned community staff revealed that Dalong Property's withdrawal may be related to the adjustment of its own business direction. In addition, the reporter noticed that a "Notice on the Collection of Property Management Service Fees in 2024" was posted at the exit of the gate of Shuangyu East District Community. The signature was also Dalong Property, and the time was June 2024. The notice stated that Shuangyu East District has begun to collect property management fees for 2024 from January 1, 2024, but some owners still owe fees, and require owners in arrears to pay as soon as possible. For those who refuse to pay property management fees, Dalong Property may come to collect payment, or even sue for payment.

The difficulty of collecting property fees has also received widespread attention. An owner in Wuhan Economic Development Zone told reporters that the property fee payment rate should have been quite high when the property was first delivered, because if you don't pay the property fee, you won't get the house key from the property management staff. Through the community owner group, the reporter learned that some owners are currently refusing to continue paying property fees on the grounds that the property service is not in place and the property fee is too high.

At a time when many real estate companies are caught in a liquidity crisis, most property management companies that were born out of real estate companies have evolved from "foil" to high-quality assets because of their stable managed area and considerable cash flow. However, under the current environment, property companies are under pressure to develop, and the collection rate of property fees has declined significantly. According to CRIC Property Management Research Data, affected by factors such as falling housing prices and declining satisfaction, the collection rate of property fees in typical cities has fallen to varying degrees, with an overall decline of 2%-3%. Among them, Shanghai's collection rate fell to 90% in 2023, a year-on-year decrease of 2 percentage points, while Beijing's collection rate in 2023 was much lower than Shanghai. The collection rate of property fees of the top 500 property companies fell to 80%, a year-on-year decrease of 4 percentage points.

"If a community's property fee collection rate can maintain 85%, it can basically meet expectations," Yan Yuejin said. Wang Yuchen pointed out that the collection rate of property fees to achieve a positive cycle often needs to be combined with the operating conditions and investment costs of different property companies, and a fixed and unified collection rate of property fees cannot ensure a positive cycle of property management. The collection rate of property management companies must at least ensure that costs can be covered. On this basis, there is still money to be used to improve service levels, such as introducing new equipment, employee training, service upgrades, etc., to stabilize the original service community with high-quality services, and continuously expand the market, so as to achieve a positive cycle of property management.

Editor-in-charge: Li Weilai Editor-in-chief: Zhang Yuning