1. Guangzhou has unveiled detailed rules for overhauling its commercial housing sales system, joining Beijing and Shanghai in implementing national measures designed to curb reliance on presales and tighten controls over developers' funding [para. 1]. Issued Sept. 30 by the Guangzhou Housing and Urban-Rural Development Bureau and other departments and effective immediately, the rules cap deposits for projects sold as completed homes at 5% of a property's total price, the highest limit among the three cities [para. 2]. Under the rules, developers of completed-home projects can sign deposit agreements with buyers after obtaining a construction permit for a residential building, with deposits not exceeding 5% of the home's price [para. 3]. The rules follow a national notice issued Aug. 28 by the Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources and the National Financial Regulatory Administration, which created a nationwide deposit system for completed-home sales for the first time [para. 4]. Beijing subsequently set a 1% deposit cap for such projects, while Shanghai imposed a 3% ceiling [para. 5].
2. Guangzhou, like Beijing and Shanghai, will require all deposits for completed-home projects to be placed in supervised accounts and prohibit their use while the funds remain under oversight; accounts can be released only after a project completes its final construction filing, utilities are ready for delivery and public-service facilities within the residential community have passed completion inspections [para. 6]. Yan Yuejin, vice president of the Shanghai E-House Real Estate Research Institute, said deposits in completed-home projects are not intended to finance construction, unlike down payments and mortgage loans in the traditional presale model [para. 7]. Instead, the deposits establish the relationship between developers and prospective buyers before homes formally qualify for sale, by setting the sales price, delivery timetable and liability for breach of contract, an arrangement intended to stabilize expectations on both sides [para. 8].
3. Guangzhou also spelled out tighter rules for the supervision of presale proceeds: the required level of supervised funds must cover all remaining construction costs, ensuring projects can be completed and water, electricity and gas connections meet delivery standards [para. 9]. Once a project completes its final filing, utilities are ready and public facilities have passed inspection, the housing-fund regulator may retain a specified amount before releasing the rest; the supervised account can be closed only after the homes' initial property registration is completed [para. 10]. Chen Xueqiang, research director at the Guangzhou branch of China Index Academy, said Guangzhou's rules provide more detailed procedures on the amount of funds subject to oversight, facility inspections, retained balances and account closures [para. 11].
4. The changes further restrict developers' access to cash during construction: deposits for completed-home projects cannot be used to fund building work, while mortgage-loan proceeds for presale projects will arrive considerably later [para. 12]. Under the national rules issued Aug. 28, residential projects must reach the stage of topping out before being offered for presale, and for projects that obtained presale permits after that date, banks cannot disburse individual mortgage loans until the project has completed its final construction filing; Beijing, Shanghai and Guangzhou have all adopted that requirement [para. 13]. Yan said the later disbursement of mortgage loans will extend developers' cash-conversion cycles, making development loans, installment payments for land purchases and phased project construction more important to maintaining funding balances [para. 14].
5. Guangzhou and Shanghai have also allowed developers to pay land-transfer fees in a "1+1" installment structure: buyers must pay at least 50% upfront and generally settle the balance within one year, with the deadline extendable by up to another year through prescribed procedures and no interest charged on installment payments; Beijing allows the remaining balance to be settled within two years of signing the land-transfer contract [para. 15][para. 16]. A key difference among the cities concerns how projects can proceed when land-transfer fees have not been fully paid: Guangzhou said projects meeting the new presale requirements, as well as completed-home projects, can apply for planning permits, construction permits and property surveys after receiving a preliminary land-registration certificate, and developers can sell homes corresponding to land for which transfer fees have been fully paid [para. 17][para. 18]. Shanghai also allows installment payers to obtain planning permits on the basis of a land-transfer contract, but they must pay the full land price before completing initial registration of state-owned construction land-use rights and obtaining the first batch of presale permits [para. 19].
6. Guangzhou introduced additional measures aimed at giving developers greater flexibility in construction and mortgage financing: projects can be developed and processed in phases or by individual building, with planning permits, construction permits, civil-defense filings, presale permits, completed-home sales filings and final construction filings all handled separately, each building must be capable of independent use, and developers must specify the construction sequence and delivery timetable for supporting facilities [para. 20][para. 21]. The city also said it would explore allowing mortgages to be established on shares of state-owned construction land-use rights associated with individual units, calculated by a unit's floor area as a proportion of the project's total floor area and used collectively as collateral [para. 22]. Beijing and Shanghai did not specify comparable arrangements in their newly released rules [para. 23]. Yan said phased development and mortgages on land-use-right shares could give developers more flexibility in project execution and financing, helping ease funding pressure during construction [para. 24].
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