SHANGHAI yesterday took the first step in a grand plan to head off the city's brain drain with an affordable, subsidized rental scheme.

The initiative is aimed at making Shanghai more attractive for upwardly mobile young people, particularly middle-income professionals.

The municipal government has issued draft guidelines on the program in a city where rent costs can be prohibitive. Those who quality for the scheme cover a wide area.

People with permanent Shanghai residency and, in a first, out-of-towners granted local residency who have contributed to city social welfare funds for a certain period are eligible.

The latter category must be under a work contract with a local firm.

The guidelines would be open for public comment through June 13, the Shanghai Housing Guarantee and Administration Bureau said.

The rental properties are mostly new apartments of between 40 and 50 square meters in area, equipped with modest decorations, basic furniture and even a few home appliances.

They will be available to qualified people who now have less than 15 square meters of living space per capita or no property in the city, according to the draft.

Officials are alarmed that Shanghai is losing talented people of marriageable age because of high housing costs.

The lease contracts will be no less than two years and no longer than five years, with a renewal option at the end if tenants are still eligible.

No overall income threshold has been set by the government.

Each district should map out its own guidelines on applicants' income thresholds for qualification and relevant data must be made public.

"The rental housing scheme has again indicated the local government's commitment to offer decent housing to people on medium and low incomes, particularly young migrant professionals who can't afford their own houses," said Song Huiyong, a research director with Shanghai Centaline Property Consultants.

Questions remain, such as how many rental apartments will be built under the program and when they'll be ready for occupancy, Song said.

Rentals for the city-sponsored apartments would be a bit cheaper than market prices, according to the draft.

"It would be great if I can qualify for the program," said Sammy Wang, a Jiangsu Province native who graduated from a Shanghai university last year and now works for an IT company in the Pudong New Area.

"Renting a flat from individual home owners makes you feel somewhat unsafe because you never know when you will have to look for another apartment if your landlord asks you to leave or raises the rent."