A Blockchain-based Housing Rental System

Chen Qi-Long

, Ye Rong-Hua

and Lin Fei-Long

College of Mathematics and Computer Science, Zhejiang Normal University, Yingbin Avenue 688, Jinhua, China

Keywords: Blockchain, Smart contract, Ethereum, IPFS, Rental system.

Abstract: This paper proposes a blockchain-based solution for housing rental system to achieve peer-to-peer sharing of

listings information in an intermediary-free manner. The new solution programmatically converts traditional

lease agreements into smart lease contracts, improve the efficiency of the leasing process, and store transaction

records for the leasing process to provide legal protection for tenants and landlords. The emerging

technologies, including smart contract and IPFS (Inter Planetary File System) are exploited in the new system.

IPFS is used to store listings information. The Ethereum’s Smart Contract is used to manage the hash of IPFS

listings information, and a smart lease contract is written to make the housing rental process traceable and

visible.

1 INTRODUCTION

The 21st century is an information age, and the value

of data is getting higher and higher. In a traditional

Internet application, it tends to have more users and

more data, so that it can obtain greater business value,

and this data can only be controlled by one enterprise.

Internet applications such housing rental system has

such a problem, it has a large enough listings and

users can freely change the listing price (Yu, 2018),

control the market, even monopoly housing rental

market may occur (Zhuang, 2017). Provide listings

information publishing and display is unable to meet

demand between the landlord and the tenant. Tenant

and the landlord would normally use a traditional

lease agreement to protect their interests during the

lease, the two sides funds use third-party payment

instruments in the transaction process of turnover,

can’t ensure the realization of irreversible

transactions, nor will it be able to completely store the

transaction records generated during the lease period,

so it is easy for both parties to generate inevitable

coordination disputes.

Blockchain technology can solve the problems of

the current rent areas centralized access control and

the problem of not being able to systematically

manage the leasing process. The blockchain uses

peer-to-peer technology (Yu, 2017), which makes it

possible to implement decentralized applications

(Wilkinsom, 2016). The proof of work (POW) (Gupta,

2017) is used to ensure that the stored block

information cannot be tampered with (Cheng, 2018).

The emergence of blockchain also laid the foundation

for smart contracts. A smart contract is a new

decentralized infrastructure and distributed

computing paradigm that uses automated scripting

code to program and manipulate data.

This paper proposes a decentralized housing rental

system based on blockchain technology. The main

contributions can be summarized as follows:

 Use blockchain technology, to ensure that in an

environment without a central authority, share

listings on the premise of preventing listings

information from being tampered.

 Compile traditional lease agreements into a

smart lease contract for runs automatically and

operational data.

 This paper introduces the core operation

mechanism of the blockchain housing rental

system and the functional division of the smart

contract module of the system.

The reminder of this paper is organized as follows:

Section 2 describes the related work; Section 3

introduces our blockchain-based shared listing

information and solutions that smart lease contract;

Section 4 presents the analysis and evaluation of the

system; Section 5 summarizes the paper.

2 RELATED WORK

Blockchain (Yuan, 2016) is a new decentralized

infrastructure

and distributed computing paradigm

184

Qi-Long, C., Rong-Hua, Y. and Fei-Long, L.

A Blockchain-based Housing Rental System.

DOI: 10.5220/0008097201840190

In Proceedings of the International Conference on Advances in Computer Technology, Information Science and Communications (CTISC 2019), pages 184-190

ISBN: 978-989-758-357-5

that has emerged with the increasing popularity of

digital cryptocurrencies such as Bitcoin (Nakamoto,

2009). It has the ability to eliminate friction and

reduce risk (Kim, 2018), while also limiting the

ability to recoup or cancel transactions (Kim, 2018).

Peer-to-peer distributed network records the open

history of transactions. Ethereum (2015) has become

the second largest blockchain platform after Bitcoin.

It has all the features of the blockchain and has

developed Turing's complete EVM (Ethereum virtual

machine) (Wood, 2014). Users can build arbitrarily

complex and precisely defined smart contracts and

decentralized applications based on Ethereum, it is

called DApp

(Decentralized Application) (David,

2015).

The smart contract is a computerized trading

agreement that enforces contract terms (Kim, 2018).

It translates contract terms into code and embeds

them into self-enforcing resources, minimizing the

need for trusted intermediaries between transactions,

as well as malicious or accidental occurrences (Cong,

2018). The smart contract is a self-executing script

that resides on a blockchain. Each node in the

blockchain that enables smart contracts runs a virtual

machine (VM). Blockchain network acts as a

distributed VM. Smart contracts are deterministic,

and the same input will always produce the same

output. The smart contracts operate as autonomous

actors and their behaviour is completely predictable.

Oraclize external services can provide data for

smart contract (Adler, 2018), and the data obtained

from the outside world by its proof of authenticity to

prove the original data source is authentic and has not

been tampered with (de Pedro, 2017).

IPFS is a peer-to-peer distributed file system that

uses cryptographic hash content addressing to prevent

file content from being tampered with and is designed

to connect all computing devices to the same file

system (Benet, 2014). At the same time, IPFS

provides a high-throughput, content-addressable,

fast-storage model and a hyperlink with content

addressing.

The application of blockchain technology in the

real estate field has been proposed. Stephen King and

McLernon (2016) proposed that centralized multi-

listed real estate services occupy a market leading

position in the market and users, which in turn sets

rules, prices and conditions. It describes the

limitations of the existing MLS (Multiple Listing

Service) structure (Stephen, 2016), which limits the

rules, regulations, and fees for users to choose the

default platform, or does not access the platform at all,

thus missing a huge global market. It provides a

simple white paper, raised questions and ideas, but

did not see specific solutions and implementation.

Dickason proposed the Midasium (Dickason, 2016)

blockchain system, which provides smart rental

products that allow automatic payments to landlords,

contractors, councils and property managers, using

rent or bonds as a source, and through smart contract

for transparent disbursement of funds and automated

reconciliation, the purpose is to change the ecology of

real estate transparency, efficiency, safety, and

improve profitability for investors. It provides a

simple process for a smart lease contract, and without

seeing a specific implementation, a detailed flow will

be given in this article.

3 SOLUTION

The solution in this paper is based on Ethereum's

Smart Contract, IPFS and Oraclize services. Own to

the blockchain is an expensive data storage medium,

it is not suitable for storing digital content of listings

information with multiple images. This article will

make Ethereum's smart contract and IPFS to

cooperate with each other, use IPFS to store listing

information, and IPFS hashes are stored on

blockchain smart contracts to provide traceability and

authenticity of IPFS hashes. Smart leasing contract

can be written to run on the blockchain, save landlord

and tenant leasing transactions in the process, it can’t

be tampered, as the legal basis for the future, while

safeguarding the personal interests of landlords and

tenants. In order to ensure the authenticity of the lease

bill, this article will automatically generate the lease

bill for each period during the lease period through

the smart lease contract. In this paper, Oraclize will

be used as the trigger tool for each lease bill creation.

Because Oraclize is a service for smart contracts and

blockchain applications, just like platform services.

There are already a lot of blockchain platforms are

using it, in addition to Ethernet Square there

Rootsocks, R3 Corda, Hyperledger, Fabric and EOS

are using the service. The most important thing is

Oraclize ensures that the data source is real, credible,

so select the Oraclize service to start the scheduled

task in this scenario.

3.1 System Core Operating Mechanism

Figure 1 shows the core operating mechanism of the

Ethereum Smart Contract, IPFS, and Oraclize

services in this system, and the interaction process

between smart contracts and participants.

A Blockchain-based Housing Rental System

185

In Figure 1, the landlord needs to send the listings

information stored in the JSON (JavaScript Object

Notation) (Feiler, 2018) format to the IPFS. After the

IPFS obtains the request, it will return the hash of the

listings information and store it in the listings

information contract. The tenant obtains the hash of

the listing information by visiting the listing

information contract, and the tenant obtains the

listings from the IPFS through the hash. If the

landlord agrees with the tenant, the landlord will

create a smart lease contract through the lease

agreement producer contract and save the smart

contract address. The landlord and the tenant obtain

the own smart lease contract address through the lease

contract creator, and operate the smart lease contract

through the address.

3.2 Smart Contract Module Function

Division

Through the module function division, we divide the

contracts designed in this paper into three categories:

listings contract, lease agreement producer contract,

smart lease contract. This section will describe the

specific features of the three contracts in detail:

1. Listings Contract (LC): It’s used to store the hash

of the listing information generated by IPFS. The

landlord can control whether the stored hash can be

retrieved by the outside world. Therefore, the hash

has the following three statuses:

① Unavailable status: When the landlord does not

want to rent the house or the house is being

renovated, we can set the status of the current

listing information hash to the unavailable-

status through the listing information contract,

and the hash cannot be retrieved by the outside

world;

② Rented-status: When the house is rented, the

landlord can mark the current listing as rented,

and the hash cannot be retrieved by the outside

world;

③ Available-status: The house is looking for

tenants and the hash can be retrieved from

outside.

2. Lease Agreement Producer Contract (LAPC):

The landlord will send information about the lease

process, such as the lessee's public key, lease term,

rent, deposit, date of lease, etc., to create a smart lease

contract. The created contract address will be saved

in the lease agreement producer contract, and the

participant will only be able to access the smart lease

contract address associated with himself, which

makes the smart lease contract traceable and easy to

manage.

3. Smart Lease Contract (SLC): This paper

abstracts the traditional lease agreement. There will

be five statuses in the lease process: status of signing

the contract, paying the deposit status, status of

renting process, returning status of the deposit, and

status of completing the contract. In these five

statuses, the status of lease process and the retuned

deposit status are sub-statuses of the contract. In the

leasing process, a rental bill is generated, which is

divided into four statuses: pending record meter status,

settlement status, paid status and take out the rent

status. After the lease is over, the landlord needs to

Figure 1: The core operating mechanism of the rental system based on Ethereum, IPFS, and Oraclize.

CTISC 2019 - International Conference on Advances in Computer Technology, Information Science and Communications

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return the deposit to the tenant. The landlord sets the

refunded the amount of the deposit. The tenant

decides whether to accept the amount of rented

deposit by the landlord. Therefore, the retuned

deposit status is divided into 4 statuses: set the

refundable deposit amount, waiting for confirmation

status, unaccepted status, and accepted status. In this

article, because each period of bills needs to be

automatically created in the lease contract, it is

necessary to send the Ether into the smart lease

contract to run the Oraclize service. This step is

referred to activating contract status. Figure 2 shows

the specific process of the smart lease contract

divided into six statuses changes.

Figure 2. Smart lease contract flow chart.

3.3 Status of the Smart Lease Contract

The operation process of the six statuses of the smart

lease contract is as follows:

1. Activate contract status: Since the Oraclize

service requires gas during the operation, a certain

amount of ether must be submitted in the contract.

The landlord sends enough ethers to the contract to

modify the status of the contract to activated. This

operation can only be executed by the landlord and

the current contract is not activated.

2. Sign contract status: The tenant can check the

terms of the contract. If tenant agree to the terms of

the landlord's lease agreement, you can sign the

contract and change the contract status to signed. This

operation can only be executed by the tenant and the

current contract is not activated.

3. Pay the deposit status: The tenant needs to pay the

deposit amount required in the contract to make the

contract come into effect and change the contract

status to the paid deposit. This operation can only be

executed by the lessee and the current contract has not

yet paid the deposit.

4. Rental process status: This is the most time

consuming process for a smart rental contract. After

the entry into force of the contract, the lease will

automatically create bills of the first period. Each

subsequent period will be based on the lease date of

the contract as the collection date, and the rental bill

for each period will be automatically generated by the

Oraclize timing service on a monthly basis. Each

period of the rental bill will have four statuses. Figure

3 shows the specific process of the transaction

between the landlord and the lessee during the lease

period.

Figure 3. Work flow chart of the smart lease contract during

the lease period.

① Pending record meter status: This status is the

initialization status of the lease bill. (Note: the

rent of the first period paid by the lessee has not

yet generated hydropower, so the lease status of

the first period is unpaid, and the renter only

needs to pay the rent.).

② Settlement status: The landlord records the

water meter and electricity meter of the tenant

this month. The smart contract will

automatically calculate the water and electricity

charges used this month, and count the fees

payable this month, and update the current bill

to settled. This operation can only be performed

by the landlord and the billing status is

unrecorded meter.

③ Paid Status: The tenant sends an Ethernet to the

smart rental contract based on the cost of the

settled bill. The smart lease contract stores the

A Blockchain-based Housing Rental System

187

rent sent by the tenant and modifies the billing

status to the paid status. This operation can only

be performed by the tenant and the lease bill

status is the settled status;

④ Take out the rent status: the landlord can take

out the rent paid by the lessee in the smart lease

contract at any time, and the lease bill status is

changed to the status of the rent has been taken

out. This operation can only be performed by the

landlord and the lease bill status is paid.

When the lease contract has reached the lease term

and the lease bills is all in the paid status, the contract

participant can change the status of the contract to the

return of deposit status.

5. Return deposit status: The landlord will deduct

the relevant fees from the contract deposit according

to whether there is any loss of fixed assets during the

lease period. This fee will be negotiated with the

lessee, so there are four statuses as follows during the

refund of the deposit. Figure 4 shows the flow chart

of returned deposit:

Figure 4. Work flow chart for returned deposit

① Set the refundable deposit amount: The landlord

sets the pre-returned deposit and modifies the

status of returned deposit to the wait for

confirmed status. This operation can only be

executed by the landlord and the contract status

is not " 5.④".

② Waiting for confirmed status: The tenant can

choose whether to accept the amount set by the

landlord and modify the current status to

unaccepted or accept status, the operation can

only be operated by the tenant.

③ Unaccepted status: If the tenant does not accept

the amount of returned deposit by the landlord,

need to go back to " 5.①" and let the landlord

reset the amount of returned deposit.

④ Accepted status: If tenants choose to accept, the

contract status changes have been completed

status.

6. Completion status: The landlord and the lessee

have completed the entire lease, and the landlord can

retrieve the remaining balance in the lease contract,

and the lessee can retrieve the deposit from the

contract.

4 ANALYSIS AND EVALUATION

4.1 Case Study

In this section, we will conduct case studies based on

blockchain-based housing rental platforms by

publishing listings, managing listings, visiting

listings, creating lease agreements and all aspects of

the rental process.

When a user wants to publish a listing, the user

does not need a complicated registration process, and

only needs the user to have an Ethereum account and

a small amount of Ethereum to store the hash

information of the listing information generated by

the IPFS. The hash value is stored in the LC, and the

smart contract will be shared and used by all nodes to

share the listing information.

When users post their own listings, they may

renovate their homes, or they may not want to rent

their own homes, or the listings are already rented out.

The user can call the LC to modify the status of the

hash of the apartment on any Ethereum node to

change to the unavailable-status or rented-status. If

the user wants to re-let the house, he only needs to

change the status of the house to the available-status.

Users can access the LC contract on any node of

Ethereum and get information about the listings that

the Hash has visited. For different roles, access also

have some differences. The tenant can quickly obtain

a list of all the hashes of the available-status in the LC

through the smart contract. The landlord not only has

access to all available-status listings, but also quickly

obtains the hash of the listings published by himself

from the LC to quickly manage the listing hash.

If the tenant finds a suitable listing and will contact

the landlord, the landlord can send the lease terms to

the LAPC at any Ethereum node to create the SLC

contract. The LAPC will automatically save the user's

SLC address so that the user can quickly obtain their

SLC address.

After the lease agreement is created, the landlord

and the tenant will sign the contract and the tenant

will pay the deposit. After the lease takes effect, the

landlord will calculate the monthly utility fee for each

period in the leasing process and add the rent to the

total rent for each period, then collect rent. When the

lease expires, if the tenant does not violate the lease

agreement during the lease period, the deposit will be

returned. Otherwise, the landlord will deduct some of

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the fee from the deposit. If the tenant agrees, the lease

ends. In this system, both the landlord and the tenant

will perform every stage during the lease period

through the SLC. To ensure the credibility of the bill,

the SLC automatically generates a lease bills for each

period based on the amount set when the lease

contract was originally created. After the bill is

created, the landlord only needs to fill in the current

water meter and electricity meter to the SLC. The

SLC calculates the water fee and electricity fee used

this month according to the unit price of the water fee

set at the time of the contract creation and the unit

price of the electricity bill. These links are recorded

in the SLC, and the information in the SLC can only

be called by the landlord and tenant in the contract,

and the transaction process between the landlord and

the tenant during the entire lease period is fully

recorded. The SLC can be an effective legal

document when a dispute arises between the landlord

and the tenant.

4.2 Cost and Practicality Analysis

We have completed the development of a blockchain-

based rental system, and the system's smart contract

prototype will be compiled and deployed on the

Rinkeby network of the Ethereum network. During

the analysis period, the exchange rate of Ethereum

and US dollar in November 2018 was

1Ethere≈179.56USD. The minimum gas price for

executing a trade is 1GWEI, 1GWEI=0.000000001

ETHER. The lower the price of gas, the longer the

time to complete the verification transaction.

However, the speed of time is not the focus of this

paper, and the average time for each interface of the

system's smart contract is 18 seconds, so the gas price

is set to 1GWEI.

We used two different nodes on the Rinkeby

network (Péter, 2017), one node operated by the

landlord and the other operated by the tenant. Table 1,

Table 2, and Table 3 respectively show the gas and

cost of LC, LAPC, and SLC performing operations.

Next we will calculate the total cost of executing the

three contracts.

We do not calculate the cost of deploying contract

usage, only the execution cost of the main functions

in each contract. The LC contract executes a total of

$0.572 for adding a listing hash and updating the

listing hash. LAPC executed the creation of an SLC

contract costing $0.8103. This test sets the SLC lease

period to 6 periods. Since the first period bill does not

need to pay for utility bills, there is no need to record

the water/electricity meter. Therefore, the SLC will

be executed six times to pay the rent and five times to

record the water/electricity meter during the leasing

process, for a total cost of $0.4666. The total cost of

other operations is $0.1164, which gives the total cost

of implementing SLC at $0.583. As a result, the user

executes 3 smart contracts, the total cost is about

$1.9653, which greatly reduces the extra cost of the

lease.

Table 1 The gas and cost of LC performing operations

Operation

Gas Used

Actual Tx Cost (Ether)

USD ($)

Add a listing hash

279311

0.000279

0.0500

Update listing hash status

41177

0.000041

0.0072

Table 2 The gas and cost of LAPC performing operations

Operation

Gas Used

Actual Tx Cost (Ether)

USD ($)

Create an SLC contract

4512562

0.004513

0.8103

Table 3 The gas and cost of SLC performing operations

Operation

Gas Used

Actual Tx Cost (Ether)

USD ($)

Activate contract

66162

0.000066

0.0119

Sign contract

30693

0.000031

0.0055

Pay the deposit

383779

0.000384

0.0690

Record water/electricity meter

429517

0.00043

0.0800

Pay rent

61778

0.000062

0.0111

Complete the rental process

32450

0.000032

0.0057

Set the refundable deposit amount

70723

0.000071

0.0112

Accept or not accept refunded deposit amount

38499

0.000038

0.0068

Retrieve the remaining balance in the lease contract

35012

0.000035

0.0063

A Blockchain-based Housing Rental System

189

5 CONCLUSIONS

The research and application of blockchain

technology has shown explosive growth and is

considered to be the fifth disruptive innovation in the

computing paradigm following mainframes, personal

computers, the Internet, and mobile/social networks.

It is the fourth milestone in the evolutionary history

of human credit following blood credit, precious

metal credit, and central banknote credit (Swan,

2015).

Block chain technology enables many impossible

possible. The blockchain-based housing rental system

has added a good case for the application of

blockchain technology. The system uses the

blockchain to share the listing information,

preventing large companies from having too many

users to control the market price. The system realizes

a truly decentralized housing rental system, and the

system no longer requires a high amount of

intermediary fees. This system realizes the real

release of peer-to-peer listings and listings. The

system converts the traditional leasing method into a

way of coding through the Ethereum Smart Contract

during the rental period for the landlord and the lessee.

The contract can only be run forever in the way it was

originally set. The contract permanently preserves all

transaction information and records of the lessee and

the tenant during the leasing process, which provides

legal protection for both the lessee and the landlord.

ACKNOWLEDGEMENTS

This work was supported in part by NSF of China

under the grant 61877055 and by NSF of Zhejiang,

China under the grant LY18F030013.

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