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Two major cities are to begin allowing renters to acquire urban hukou - a registered resident's permit - in a move experts say will attract more skilled workers and boost rental markets.
Qingdao, Shandong province, issued a notice on Tuesday that said people who have a stable residence in the city, including renters, can now obtain local hukou.
The city government said it would accelerate steps to scrap several other limits on hukou registration.
Tianjin also released a similar policy for renters. The local government promised to offer favorable hukou registration for new graduates who find jobs in the northern city but went to school in other provincial areas.
Under the current system, local hukou holders have more rights and advantages in employment, education, social security, pension, house purchases and other legal interests.
Usually, people from outside the urban area have to spend a large sum of money to purchase an apartment in order to acquire hukou.
Housing prices in some cities have doubled over the past two years, causing many complaints about unaffordable prices. The status quo is especially obvious in major cities, setting up a barrier for people from outside to start living there.
"The new policy will have a positive effect on population flow and unleash a substantial demand for house purchases and rental properties," Yan Yuejin, research director at E-house China R&D Institute, was quoted as saying by China Business Journal.
Qingdao and Tianjin are not the first cities to upgrade household registration policies for renters.
In June, Guangzhou, capital of Guangdong province, took the lead in allowing homebuyers and renters to have the same rights and interests.
A policy that took effect in September in Wuxi, Jiangsu province, allows renters to be granted urban hukou if they satisfy certain requirements.
Zhengzhou, Yongzhou and Jinan also plan to release similar measures, according to various media reports.
Insiders say that granting renters hukou would protect their rights, and they have urged more cities to follow suit.
However, Beijing Youth Daily warned in a comment about possible complications, such as how to balance the interests of owners and renters, the challenge of providing enough public services and communal facilities, and especially the unreasonable rise in rents.