PUDONG New Area government will buy 200 million yuan (US$26 million) worth of homes this year to lease to the poorest families in the district.
The money has been put in a special fund and a service center was set up yesterday to run the scheme, Oriental Morning Post reported.
The center will buy apartments, approve applicants and allocate homes to approved families. Homes will mostly be in remote districts.
China's Ministry of Construction has ordered every province to establish a system to allocate budget homes to needy tenants. The measure will lease space at low rents to residents on the lowest income.
Governments usually encourage poor families who cannot afford to buy houses to rent apartments, and give them rent subsidies.
Shanghai has 77,397 needy families living in rented budget homes. Almost 29 percent of them receive rent subsidies.