Beijing introduces joint property rights housing

Beijing joint property rights housing

Beijing is planning to introduce homes that will be owned jointly by the government and buyers for the first time. First-time buyers can own a home with a lower burden through a way similar to instalment payments. This is to help first-time buyers get on the property ladder and to tame surging home prices.

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The joint property ownership policy allows first-time buyers to pay a portion, say 75%, of the total apartment price and hold the corresponding ownership with the government. As well as being granted the full right to use the property, buyers can enjoy the rights of household registration and school admissions for children, according to the Beijing Municipal Commission of Housing and Urban-Rural Development. Similar to economically affordable housing, the government and home buyers will share the incremental profit of joint property rights housing, as well as the risk of asset depreciation. This means that if the property is put up for sale at an increased price, which is the usual situation in the current Chinese property market, the government will receive a proportion of the capital gain. This can prevent speculation activities in joint ownership properties.

At the same time, strict requirements will be imposed on this programme to ensure efficient allocation of public resources. For example, buyers and their families do not own property at the time of purchase, or have not previously owned property, single buyers must be at least 30 years old and families can only apply for one home. Owners can sell their shares five years after the purchase, where the government has the right to buy back. However, the details of the joint property ownership policy have not been announced by Beijing authorities yet. Some industry insiders expect that buyers would need to pay 50%-75% of the total home price to receive 50%-75% of the ownership with the remaining ownership held by the government.

The price of units under the joint property rights housing scheme will be lower than commercial properties in the same neighbourhood as Beijing authorities will provide policy support for the construction of these units. Since some of the demand for home purchases will gradually shift to joint property rights housing, the demand for commercial properties will decrease and hence the growth of property prices in the entire real estate market may slow down in the long run.

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