Visitors view building models at the Shenyang International Exhibition Center in Shenyang, capital of northeast China’s Liaoning Province. Photo: Xinhua
Giving tenants of affordable housing an ownership stake in their homes will help curb irregular real estate purchasing, Outlook Weekly, sponsored by the official Xinhua News Agency, reported Saturday.
Legislators were drafting a law on a housing guarantee before the Spring Festival, and the idea became a hot topic, particularly as the National People’s Congress and the Chinese People’s Political Consultative Conference draw near.
Under the proposed laws, local governments would own a share of affordable houses sold to low-income earners. Homeowners would not be allowed to sell the houses within five years of buying them. After that, if they do sell them, sales income would be shared with local governments, Outlook Weekly reported, citing Wang Hongliang, a professor at Tsinghua University responsible for the draft law.
In recent years, affordable housing has helped low-income citizens, but illegal purchasing has also been present. Some speculators with high incomes bought affordable houses and made huge profits selling them.
But if the draft law is approved, "the speculators’ profit margins will shrink, and to some extent lower-income residents’ habitations will be guaranteed," Wang said.
Analysts said the regulation could encourage local governments to build more affordable houses. No less than 10 percent of local governments’ income from land sales must be spent on building affordable housing projects, according to the low-income housing fund management guidelines released by the Ministry of Finance at the end of 2007.
"But most local governments do not follow the guidelines strictly and spend less of their land sales profits," said Chen Guoqiang, director of the real estate research center of Peking University.
From January to November last year, only 46.66 percent of the planned land supply for affordable housing was offered, according to data released by the Ministry of Land and Resources.
"Local governments have little enthusiasm in building affordable housing because of the lower returns," Li Zhanjun, a development department director at E-house China R&D Institute, said Saturday.
In some cities including Shanghai, trial programs allowing local governments to own a share of affordable housing have been put into place.
In Shanghai’s Xuhu and Minhang districts, homeowners in the program have limited property rights and once the houses are sold, individual owners will receive 70 percent of the sales income, while the local government gets the other 30 percent, according to Outlook Weekly.
But Li said "some of the applicants transferred their bankbooks temporarily to their relatives and even pretended to get divorced so as to meet the standard for low income housing eligibility."
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