1. China’s housing, natural-resource and financial regulators issued two sets of rules delaying developer access to homebuyer money: presales generally may begin only after a building’s main structure is topped out, and banks must withhold mortgages until completion filing. [para. 1][para. 2][para. 3] The People’s Bank of China described this as supporting reform of commercial-housing sales; the goal is not to end presales immediately but to steer the market toward completed-home sales under stricter conditions. [para. 4][para. 5]
2. Under the old model, developers financed land purchases with their own money, construction partly with bank loans, then drew on deposits, down payments and mortgages during construction, enabling fast capital recycling. [para. 9][para. 10][para. 11] Presale was permitted once development spending reached 25% of total investment; local thresholds varied—Shenzhen required two-thirds of aboveground floors for tall buildings. [para. 12][para. 13] Banks released mortgages early in the boom, but after the 2021 downturn most waited until topping-out; funds still entered projects during construction. [para. 14][para. 15] Buyer money was critical: in 2021 it accounted for 52.9% of developers’ funds, 4.6 times domestic loans; in the latest seven-month data it was 44.6%, more than three times domestic loans. [para. 16][para. 17]
3. Under the new rules, topping-out releases deposits and down payments into regulated presale accounts, while mortgages arrive only after completion filing; because presales can begin within 6-12 months but completion takes 2-3 years, a funding gap emerges. [para. 22][para. 23][para. 24] Lenders must use entrusted payment, transferring mortgage funds directly to project accounts. [para. 25] Projects with construction permits by Aug. 28 retain old policies; new or unpermitted projects must give priority to completed-home sales. [para. 26][para. 27] Some developers rushed permit applications after learning of the change. [para. 28]
4. Regulators expect development loans to bridge most of the gap, with terms up to five years for presale projects—seven for completed-home projects—and first principal repayment after completion filing. [para. 30][para. 31][para. 32] Loans require full contributed equity, cannot be used for land costs, and some banks require developers to contribute 35% or more of project costs; lending quotas have not been increased as of Aug. 29. [para. 35][para. 36][para. 37][para. 39] Longer borrowing raises interest costs: at 3%, a 2 billion yuan loan outstanding an extra year costs about 60 million yuan. [para. 40][para. 41] A new lead-bank system, building on 2024 “white list” arrangements, keeps project funds in one bank and prevents diversion. [para. 42][para. 44][para. 45]
5. Land payments may now be made in installments; Shenzhen allowed 50% upfront and the remainder in six months, while Guangzhou Nansha linked installments to completed-home sales with up to two years to pay. [para. 46][para. 47][para. 48] Regulators also support private share placements, private real-estate funds and real-estate investment trusts for long-term capital. [para. 50]
6. Developers must tie up more capital per project: E-House estimates a hypothetical project needing about 700 million yuan in peak funding under old presales, rising above 1.2 billion yuan if sales proceeds arrive later, cutting the internal rate of return by 3-5 percentage points. [para. 53][para. 54][para. 55] This curbs leveraged expansion and makes land purchases more selective; wrong decisions are harder to reverse. [para. 56][para. 57][para. 58]
7. Buyers will no longer service mortgages during unfinished construction, and the maximum mortgage term rises from 30 to 40 years. [para. 59][para. 60] Borrowers may renegotiate or replace floating-rate mortgages if rates diverge, and banks can offer payment delays, extensions or deferred principal to borrowers who temporarily lose income. [para. 61][para. 62] Financing is likely to become less dependent on developers’ corporate credit and more focused on individual projects, shifting competition toward quality, delivery and capital organization. [para. 63]
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