Top Biz News

China tightens land purchase rules

(Agencies)
Updated: 2010-03-11 11:43

China is requiring a down payment for land purchases equal to 50 percent of a plot's price and prohibited the supply of land for villas as the government sought to increase affordable housing.

The down payment must be paid within a month of signing a contract for the land purchase, the Ministry of Land and Resources said in a statement on its Web site late yesterday. Buyers must also pay a deposit when taking part in land auctions that is equal to 20 percent of the minimum price for the land, according to the statement.

China's property prices rose at the fastest pace in almost two years in February, statistics bureau data showed yesterday, adding urgency to the government's efforts to rein in speculation and increase the amount of affordable housing.

Chinese officials are trying to reduce the risk of asset bubbles, resurgent inflation and bad loans for banks after flooding the world's fastest-growing economy with cash to drive a recovery. Premier Wen Jiabao warned of "latent risk" in the country's banks in his speech to the annual?meeting of top legislature in Beijing last week.

Gemdale Corp, a Shenzhen-based developer, fell 1.2 percent to 13.60 yuan ($1.99) yesterday. China Vanke Co, the largest property builder in China, slid 0.4 percent to 9.44 yuan.

Residential and commercial real-estate prices in 70 cities climbed 10.7 percent from a year earlier, the statistics bureau said on its Web site yesterday. That topped a gain of 9.5 percent in January.

Curbing speculation

To cool speculation, the government in January re-imposed a tax on homes sold within five years of their purchase, after having cut the taxable period to two years in January 2009 to bolster a then-flagging market.

The land ministry said in its statement that not less than 70 percent of new land supply should be used for affordable housing and smaller apartments, and that plots for villa construction is "strictly prohibited."

Developers have to submit to the land ministry the expected start and completion dates for housing projects and explain in writing any delays. Those that fail to comply will be barred from land auctions for at least a year, the statement said.

Shanghai, mainland China's financial hub, plans to implement more measures to control property prices, such as introducing a policy for the leasing of public housing, the city's Communist Party chief Yu Zhengsheng said March 7.