Reforms over who can build homes

China will work on plans to allow non-real estate companies to build residential properties on land parcels to which they have acquired rights of use.

The government will also no longer be the sole provider of residential plots, Minister of Land and Resources Jiang Daming told a national land resources work conference held on Monday.

Trials on building rental housing on rural land, currently being conducted in more than a dozen Chinese cities, will be deepened as the country steps up efforts to put in place a housing system that ensures supply from multiple sources, provides housing support through multiple channels and encourages both house purchases and rental, Jiang said.

China has already launched pilot programs in 13 major cities, including the gateway cities of Shanghai, Beijing and Guangzhou as well as lower-tier cities such as Shenyang, Nanjing, Chengdu and Foshan.

The aim is to allow collective rural economic organizations to build and rent housing on rural land themselves or through joint ventures, the Ministry of Housing and Urban-Rural Development said in a statement posted on its website in late August.

“Different types of land suppliers will likely prompt different types of entities in land development and property operation, as well as different forms of cooperation,” said Zhang Yue, chief analyst with Shanghai Homelink Real Estate Agency Co. “This will help relieve housing supply shortage and leave an impact, particularly on the rental market.”

Under the country’s current land administration system, real estate developers can only acquire land plots designated for housing development from the government. Rural land parcels of collective ownership are not allowed to be sold in the public market until they are expropriated by the government and turned into state-owned plots.

Yan Yuejin, research director at E-House China R&D Institute, said the statement by the minister suggests that the central government is actively seeking new sources to increase land supply for rental housing that has become a new focus in the country’s building of a new housing system.

“The country is exploring new channels to raise land supply for rental units by giving the go-ahead to non-state owned land plots to enter the market,” Yan said. “This will help accelerate the pace of land supply in large cities, particularly in their suburban areas.”

In Shanghai, where the local government has earlier announced a target to add 700,000 leasing units during the five-year period through 2020, building rental housing on rural land must be a key channel to ensure future supply, according to Zhang.

“It seems almost impossible to achieve the 700,000-unit target if land plots designated for residential leasing purpose are the only source,” Zhang added.

From last July to December, the city added or plan to add a total of around 41,000 rental units to supply, including 30,000 apartments to be built on 29 land parcels designated solely for residential leasing purposes, Xu Yisong, director of the Shanghai Planning, Land and Resources Administration, told a municipal press conference this month.