Greater efforts needed to ensure affordable rental housing for all

A housing renewal project is seen under construction in Dongguan, Guangdong province. [Photo provided to China Daily] 

The General Office of the State Council, China's Cabinet, issued a guideline document clarifying institutional and policy support for the development of government-subsidized affordable rental housing from the land, examination and approval, taxation, financial and other aspects.

Such affordable rental housing, often no larger than 70 square meters per unit, aims at solving the housing problem of new residents, young people and other eligible groups, by providing housing at rents lower than the market rate. The clear definition of the target groups, rent level and area bodes well for increasing the supply of small, low-rent housing.

According to the seventh national census, China's floating population reached 376 million in 2020, up nearly 70 percent over the past 10 years. China's housing problem has already evolved from overall supply insufficiency to structural shortage, which is concentrated in big cities with huge population inflows.

Solving the housing problem for people seeking relatively low-rent housing can avoid the crowding-out effect of high housing prices on consumption, help stabilize people's housing market expectations, and promote the steady and healthy development of the real estate market.

Since 2019, the Ministry of Housing and Urban-Rural Development has launched a pilot project to improve the housing security system in 13 cities with a focus on the construction of small and low-rent housing. The difficulties these cities encountered in procuring land, planning, examination and approval, as well as in balancing operating income and expenditure, highlight the urgent need to introduce preferential policies at the national level.

Different from earlier housing security models, the State Council document attaches more importance to giving preferential policies for the establishment of a "multiple-investor, multiple-supply channel" affordable rental housing pattern, to promote the transformation of the government-dominated supply pattern to one that is jointly participated in by the government, enterprises and social forces, and the transformation of the service targets from local residents with hukou, or household registration system, to all permanent residents.

The guideline indicates five basic regulations for the development of affordable rental housing. It is problem-oriented, and focuses on solving the housing shortages for new residents, young professionals, and other people qualified for these subsidies. The system is designed to be specific, scientific, regulated and market-oriented.

First, the development of affordable rental housing should target the specific needs for new residents and young professionals. Newly built units should mainly be less than 70 square meters per unit, and lower than market rent at the same area with the same built quality. Also, the local municipal governments should specify the requirements for living in these units, as well as the unit size based on local conditions.

Second, ensure the supply matches the demand. The municipal governments should formulate annual plans for the provision and attaching policies for affordable rental housing based on local demand.

Third, clarify responsibilities for each level of government. The municipal government is taking the core responsibilities, with the provincial government taking the overall responsibilities. Further strengthening the supervision and responsibility on the construction, rental, and operation phases for affordable rental housing.

Fourth, entrust the city residents with more decision-making power. Build, renovate, rebuild, or subsidize collective-owned land, enterprise-owned or institution-owned idle construction land, industrial park accessorial land, and existing vacant residential units. Establish a "multiple-investor, multiple-supply channel" affordable rental housing pattern.

Lastly, ensure the full role of market mechanism. Encourage the establishment multiple-investor, multiple-supply channel, to speed up the development of affordable rental housing.

A series of preferential policies, such as reasonable land, water and power prices, simplified approval procedures, financial supports and fund subsidies will provide a strong guarantee to solve the shortage of construction funds and reduce the construction and operation costs of affordable rental housing. Guided by the document, all localities, especially big cities, are expected to actively expand the supply of affordable rental housing, alleviate the structural shortage of housing supply and work toward realizing the goal of housing for everyone.

The six preferential policies are as follows:

First, provide comprehensive land policies to support. The guideline has provided detailed policies and support for building affordable rental housing and collective-owned land, enterprise-owned or institution-owned land, and industrial park accessorial land, as well as renovate existing non-residential building for affordable rental housing.

Second, simplify the application process. For affordable rental housing projects on non-residential land or using existing non-residential buildings, the local governments could arrange related departments to review the construction design. Local departments could approve the project, land use, plan, construction, fire safety and other procedures after the project is qualified as affordable rental housing.

Third, the central authorities will subsidize qualified affordable rental housing projects. 

Fourth, apply tax deductions. For affordable rental housing projects on non-residential land or using existing non-residential buildings, rental housing tax incentives and property tax incentives could be applied to qualified projects.

Fifth, apply civil hydro price.

Lastly, further strengthen financial support. Support banking institutions to provide long-term loans to affordable rental housing owning entities in a market-oriented manner, and treat these entities differently when implementing real estate credit management.

Source:

English Article:<http://www.chinadaily.com.cn/a/202107/07/WS60e4e8eba310efa1bd660213.html>

Chinese Reference Articles:

<https://mp.weixin.qq.com/s/-rUENZuKHHLj7AG5DoW4-g>

<https://mp.weixin.qq.com/s/TPsjRydmIpVoo79Q3yQLeQ>

Edited and translated by Fan Junyi