As housing prices keep climbing in cities like Taipei, rents have followed suit. Renters often assume landlords have full control over pricing, but that’s not entirely true. Taiwan’s laws once imposed specific rent ceilings—though many people have never heard of them. This article walks you through the legal basis, practical realities, and reforms surrounding rent limits.
Land Act Article 97: The Legal Basis for Rent Ceilings
According to Article 97, Paragraph 1 of Taiwan’s Land Act:
“The rent of urban housing shall not exceed 10% per year of the declared total value of the land and its buildings.”
In other words, if the rental property is located within an urban planning zone, its rent is theoretically capped at this “10% annual interest” rule.
So how is this limit actually calculated? The following is based on the explanation provided by the Taipei City Land Administration (※ For other cities and counties, please refer to the respective local land administration offices for details):
Monthly Rent Ceiling = (Declared Land Value + Assessed Building Value) × 10% ÷ 12
- The declared land value refers to the amount reported by the landowner under the Land Act, which is typically only about 20% of the actual market value.
- The assessed building value is determined by the local land office based on specific regulations, and does not include interior furnishings, lighting, or additional equipment.
In short, declared land value ≠ market value! Currently, declared land value is about 20% of actual market value, while the announced land value (used for tax purposes) is around 90%. In addition, the assessed building value is often also lower than the market price.
Therefore, if rental limits are calculated based on the formula “declared total value × 10% annual interest,” and the result falls short of a landlord’s expected return on investment, it may discourage property owners from offering their homes for rent—ultimately affecting overall supply, demand, and market stability.
Does This Law Actually Work? The Practical Gaps
While Article 97 is a mandatory regulation, it only states that local governments “may” intervene to reduce rent that exceeds the cap. In practice, this “may” often means “rarely,” due to administrative inertia. Courts have also limited this rule to residential properties only—excluding commercial or mixed-use spaces like SOHO home-offices or freelancers working from home.
Historical Background: A Rule That No Longer Works
The rule was introduced in 1946, when war-torn Taiwan faced housing shortages. The goal was to prevent landlords from price gouging. But over the decades, declared land and building values have severely diverged from actual market prices.
For example, the Ministry of the Interior reported in 2016 that the average declared land value nationwide was only 20.5% of market value. The outdated rent ceiling standard is now unrepresentative of reality and may even discourage landlords from leasing their properties—creating a vicious cycle of low supply.
The 2017 Rental Housing Act: Returning to Market Freedom
To address this gap, the Rental Housing Market Development and Regulation Act (passed in 2017) explicitly states in Article 6:
“Rental prices shall be determined by agreement between the landlord and the tenant, and Article 97 of the Land Act shall not apply.”
This legislation aims to respect market forces and avoid disincentivizing landlords.
🧛♂️ Related Read: What Are the Required and Prohibited Lease Terms in Taiwan?
⚰️ Related Read: What Are Mandatory and Prohibited Clauses in Taiwan?
What Scholars and Lawmakers Say: Total Market Freedom Isn’t Ideal
A report by Taiwan’s Legislative Yuan noted that advanced countries like the U.S., Germany, and the U.K. don’t enforce fixed rent ceilings—but they do regulate rent increases:
- Annual rent hikes are capped (e.g., Germany limits increases to 20% over 3 years)
- Landlords can't arbitrarily raise rent mid-term
- Disputes go through mediation or review
The report suggests Taiwan consider similar modernized measures rather than leaving everything to market discretion.
What Should Tenants Do?
Since the legal cap no longer applies to most residential rentals, fair rent depends on your knowledge and negotiation power. Tenants should:
- Research similar properties in the area
- Check if contracts specify when and how rent can be increased
- Be alert to unreasonable charges (e.g., equipment rental, inflated utility costs)
- Contact the local housing authority or mediation center for disputes
Conclusion: Rent Pricing Must Reflect Market Reality
In today’s system, residential rents are no longer subject to Article 97, and government enforcement is rare. As a result, rental rates depend primarily on agreements between landlords and tenants.
Both sides should understand local market rates. Overpricing risks longer vacancies; underpricing cuts into returns. A clear, transparent, and fair pricing process builds trust and long-term stability.
Put simply: while there’s no legal rent ceiling, the market naturally has its price floor. Understanding the law and local pricing is key to managing rental relationships successfully.
