Beijing to build 250,000 shared ownership homes, pricing, rights sharing still unclear
Beijing authorities plan to build 250,000 shared ownership homes in five years to provide housing for young people and middle-income families who could not afford regular properties with soaring prices. Although more concrete rules are yet to be made, observers believe reasonable pricing and rights distribution mechanism would facilitate the plan and make it sustainable.

The capital city put a new land parcel—in Xibeiwang, the northern suburbs area—on sale last Friday, which is designed by the government to be used for construction of homes with capped prices. Based on the public announcement, commercial properties to be built on the lot could not be priced over 58,622 yuan per square meter.

Before this, Beijing had earmarked a piece of land in the same area for constructing shared ownership properties, with prices kept below 37,800 yuan per square meter. The price gap has led to conjectures about possible rights ratios for the new homes of shared proprietorship with the government.

The interim provisions for the shared rights and interests homes was implemented from September 30, which regulates that prices and rights distribution should be ascertained by valuation agencies separately before the land and properties are put for sale, and approved by related government departments.

This Monday, the Beijing Municipal Commission of Housing and Urban-Rural Development announced that in the next five years, the capital city would finish building 250,000 flats of shared proprietorship. “By providing reasonably priced medium and small sized flats (of shared ownership), home prices in the city could be stabilized,” said the announcement. With no detailed regulations in place, there is now still room for exploration. Some pundits believe more wisely devised pricing and rights distribution would help the grand project succeed.

On September 30, the Beijing municipal government allocated four pieces of land for construction of homes designed to be more affordable to urban residents, with the one in Xibeiwang of north city covering an area of 180,000 square meters. According to related regulations, 50 percent of property rights would be the bottom line for individual owners.

In the current framework, it is stipulated that individual owners would pay more and have higher share or pay less and have lower share, meaning the price gap between affordable homes and commercial ones in the same area would determine the rights distribution between individual owners and the government.

Previously, the yaohao (a lottery system for subscription) notice of Jindu Home—the first shared ownership property project in Beijing—announced the ownership ratio of individual and governmental owners to be 50:50.

Besides the contentious rights distribution, some observers say the current pricing system for the affordable flats also requires further discussion. Yan Yuejin, research director with the E-house China Institute, told 21 Century Business Herald that with limitations on transferring the shared ownership properties, the core idea is to reduce liquidity in order to cut down purchasing costs.

The core idea is reflected by related provisions. The interim regulations rolled out on September 20 had removed the clause allowing individual owners to transfer properties after reaching agreement with the government owner. The regulation means shared ownership properties could not be transferred as long as the interim by-laws work.

“Fluidity of the homes are thus restricted, and then valuation would be affected. So, there remains room for discussion as far as the pricing is concerned,” said Zhang Dawei, chief analyst with the Centaline Property Agency.

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