Prospective tenants visit the public rental housing at the Xinyue apartments in Shanghai, on May 15, 2013. [Photo/Xinhua]?

China's housing authorities said cities with net population inflows need to accelerate the development of rental housing projects, including encouraging cities to increase land supplies for residential rental projects.

According to a circular issued by the Ministry of Housing and Urban-Rural Development, the authorities have piloted longstay rental programs in 12 cities－Guangzhou, Shenzhen, Nanjing, Hangzhou, Xiamen, Wuhan, Chengdu, Shenyang, Hefei, Zhengzhou, Foshan and Zhaoqing.

These cities will pilot multiple-channel housing offerings to residents who do not buy their own homes, including university graduates, migrants and relocated staff, said the notice released on the ministry's website on Thursday.

The circular highlights land policy which enables newly built commercial housing projects to allocate some of the apartments to be leased instead of being sold. Metropolises and large cities can pilot programs to use land for collective rental housing projects.

In terms of financing, the ministry's circular said the authorities encourage banks and other financial institutions to strengthen financial support for rental housing projects, which take a longer time to break even than other types of housing development.

"Selling homes, particularly those of good quality in prestigious locations may realize a quick return. Leasing homes requires developers to have strong liquidity management capacity and rich expertise in property management," said Francis Yeung, general manager of sales and marketing at real estate developer K. Wah China.

State-owned enterprises with expertise and experience in the real estate sector are also encouraged to operate in the residential leasing market by developing and managing large-scale leasing projects.

China's residential leasing market is currently dominated by individual homeowners rather than institutional operators. About 2 percent of properties in the residential leasing market are operated by institutional operators, according to a report released on the Ministry of Housing and Urban-Rural Development's official website.

The circular said cities with net population inflows are required to establish government-run trading platforms for the residential property leasing market to facilitate effective, fair and transparent transactions, with a particular emphasis on protecting the rights of tenants.

Sheng Yue, an official with the ministry's leasing market supervision division, said that the trading platform will also help to supervise and monitor the residential leasing market.

Several cities have launched policies on the development of residential leasing market. In Shanghai, two land parcels were let to developers to build rental apartments for highly skilled workers in mid-June.