Caixin
Apr 07, 2014 03:33 PM

Gov't Launches Pilot for Joint-Ownership Homes

(Beijing) – China has launched a pilot program to allow the joint ownership of residential properties, a move that reinforces the effort to solve the housing problems of families that are too poor to buy, but too rich to rent a subsidized home.

The six cities involved in the pilot are Beijing; Shanghai; Shenzhen; Chengdu in the southwestern province of Sichuan; Huangshi in the central province of Hubei; and Huai'an in the eastern province of Jiangsu, the Ministry of Housing and Urban-Rural Development said at a recent meeting.

Qin Hong, director of the ministry's policy research center, said earlier that the government aims to build a three-layered housing market. The bottom layer would involve low-income families that cannot afford to buy a house renting one subsidized by the government. Those on top can buy a unit on their own.

Those in between, especially newly married couples, could buy joint-ownership houses, she said.

The ministry did not announce the income thresholds for families buying joint-ownership houses.

Under a typical arrangement, qualified homebuyers would pay less than the normal price of an apartment and own only part of it. The government would own the rest. When the families want to sell, the government could either buy the portion the families own or demand a certain payoff from the family.

This would ward off speculative investors that buy houses for no other reason than to sell them when prices increase, she said. Also, it lessens the burden on government because it requires much less capital than building subsidized housing.

The price of joint ownership properties are expected to be much lower than comparable homes because the government would charge less for land intended for developing them.

Some cities, including Beijing and Huai'an, have been experimenting with joint ownership of properties. Beijing said in October it would build 20,000 units of housing called "commercial properties for self-occupation" in 2013 and another 50,000 units this year to meet the housing demand of middle-income families. It did not say whether last year's plan was completed.

Chen Gang, deputy mayor of the capital, said earlier that houses of this type are jointly owned by the government and the buyer, and that their management resembles that of joint ownership houses.

He said this is a sustainable method of property regulation. For a small sacrifice in land sales and tax revenue on the government's part, a lot of families can have a place of their own to live and more money for consumption. It also means "the government does not need to splash out on welfare projects and get into excessive debt," he said.

(Rewritten by Wang Yuqian)

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