CHINA Law and Practice Contributed by: Nancy Zhang, Xiaoying Tian, Qian Gu and Liangqian Ying, JunHe
6.8 Costs Payable by a Tenant at the Start of a Lease Generally, in addition to rent, a refundable secu - rity deposit, equal to rent plus a management fee of three to six months in most cases for commer - cial leases (or one to three months for residential leases), is required to be paid to the landlord at the start of a lease. If the tenant wishes to improve or fit out the property, the tenant may be required to pay a security deposit for the fitting- out or improvements, refundable after the com - pletion of the work. 6.9 Payment of Maintenance and Repair Unless otherwise agreed by the parties, the landlord is responsible for the maintenance and repair of the leased premises. In practice, small maintenance and repairs of common areas and shared equipment, machinery and facilities are generally conducted by the property manager engaged by the landlord, and covered by the management fees, which are payable to the property manager by either the landlord or the tenant, subject to the lease agreement. 6.10 Payment of Utilities and Telecommunications In practice, the tenant pays their own utilities and telecommunications fees incurred in respect of, or consumed at, the leased premises. Utili - ties and telecommunications fees incurred in respect of common areas, and public equip - ment, machinery and facilities are often shared and charged to the end user (ie, the tenant in most cases, or the landlord if otherwise agreed in the lease, or if the premises are vacant) in pro - portion to the floor area of the leased premises. 6.11 Insurance Issues The landlord will usually take out and maintain, at their own cost, property all risks insurance for the leased premises, which covers physical
lord and tenant may agree in the lease whether the term may be renewed and, if so, how the lease may be renewed. PRC law provides that the landlord shall be responsible for the maintenance and repair of the leased premises, unless otherwise agreed by the parties. The tenant has the right to require the landlord to maintain and repair the leased premises within a reasonable time limit when necessary. Where maintenance and repair affect the use of the leased premises, the rent may be reduced, or the lease term extended accordingly. The frequency of rent payment is, subject to the agreement between the landlord and the tenant, generally on a monthly, quarterly or yearly basis. 6.5 Rent Variation The tenant shall pay rent in the amount and man - ner as agreed in the lease agreement. If agreed in the lease, the rental rate may be adjusted based on the agreed adjustment mechanism. Parties are not allowed to unilaterally change rent payments, unless otherwise agreed by the parties or provided for by PRC laws, such as the occurrence of a force majeure, or an unfore - seeable material change (other than commercial risks and force majeure) of circumstance. 6.6 Determination of New Rent When deciding the price adjustment mecha - nism, a fixed yearly increase rate, the consumer price index or fair market prices are often taken into consideration. 6.7 Payment of VAT The landlord is responsible for the payment of VAT on the rent income generated from leasing real estate.
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