Lejia Apartment, the Nanjing-based operator for long-term apartment rentals, ceased operations and could not pay off its debts, the company announced on its social media platform Sina Weibo on Wednesday evening.

It said in the statement that its "high-in and low-out" business model - meaning the company rents a house from an owner at a high price and then leases it to a tenant at a low price - has serious defects, and has brought relatively serious risks to the long-term rental market.

The lack of an internal management system and other factors also led to the shutdown, the statement said.

On July 21, the company announced on Weibo that some employees of its Hefei branch were suspected of embezzlement and the company planned to stop market expansion in Hefei.

Nanjing's local housing regulators organized an investigation and set up mediation service centers, providing dispute mediation and legal consulting services for customers. Also, five rental housing companies were recommend by the local industry association to offer leasing services, according to the website of the Nanjing Municipality Housing Security and Real Estate Bureau.

Since January last year, about 20 long-term apartment rental companies have faced a capital chain rupture, according to incomplete statistics, China Youth Daily said in an earlier report.

The current rental growth rate has slowed down significantly compared with the same period last year due to economic conditions and other factors, a report released on July 29 by National Academy of Economic Strategy of Chinese Academy of Social Sciences said.

Since the rental growth rate is weaker than expected, long-rental apartment providers, which have relatively radical operation methods, will face higher pressure, and some are even more likely to go bankrupt, the report said.