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Land fee rises to 20% of price
By Cao Qian |
March 12, 2010, Friday
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Print Edition
Print Edition
CHINA requires developers to pay 20 percent of a land parcel's starting price as deposit when they bid for it, the second time in three months the central government has tried to regulate the land sector to rein in the overheated real estate market.
Developers should pay a minimum deposit equivalent to one-fifth of a plot's starting price if they bid for the land, the Ministry of Land and Resources said in a notice on its Website late Wednesday.
The new policy followed a downpayment requirement equal to 50 percent of a plot's price in December, which means the threshold for developers in land purchases has been raised.
"Prior to this, there was no official requirement on deposit amount by the land watchdog and real estate developers usually pay a deposit of about 10 percent or less of a parcel's starting price," said Lu Qilin, a researcher at Shanghai Uwin Real Estate Information Services Co. "Now the threshold has been raised and developers will be more cautious when they decide to bid for land because they will suffer a larger loss if they decide to return the land."
In Shanghai, developers pay 10 percent of a plot's starting price in a land bidding, analysts said.
The ministry also reiterated the 50 percent downpayment must be paid within a month of signing a contract for the land purchase, and developers have to settle the total price of the land within a year. Previously, developers made a downpayment of between 20 and 30 percent.
The ministry also said that not less than 70 percent of new land supply should be allocated for affordable housing and medium and smaller apartments, while plots for villa construction are "strictly prohibited."
Effective from April 1, developers have to submit to local land watchdogs the expected starting and completion dates for their projects and they have to explain delays in writing. Those who fail to comply will be barred from land auctions for at least a year, the ministry said.
Land transfers in 70 major Chinese cities netted more than 1.08 trillion yuan (US$158 billion) last year, up 140 percent from 2008, according to China Index Academy.
China's urban property prices climbed 10.7 percent from a year ago in February, the fastest in 23 months, the National Bureau of Statistics said on Wednesday.
Developers should pay a minimum deposit equivalent to one-fifth of a plot's starting price if they bid for the land, the Ministry of Land and Resources said in a notice on its Website late Wednesday.
The new policy followed a downpayment requirement equal to 50 percent of a plot's price in December, which means the threshold for developers in land purchases has been raised.
"Prior to this, there was no official requirement on deposit amount by the land watchdog and real estate developers usually pay a deposit of about 10 percent or less of a parcel's starting price," said Lu Qilin, a researcher at Shanghai Uwin Real Estate Information Services Co. "Now the threshold has been raised and developers will be more cautious when they decide to bid for land because they will suffer a larger loss if they decide to return the land."
In Shanghai, developers pay 10 percent of a plot's starting price in a land bidding, analysts said.
The ministry also reiterated the 50 percent downpayment must be paid within a month of signing a contract for the land purchase, and developers have to settle the total price of the land within a year. Previously, developers made a downpayment of between 20 and 30 percent.
The ministry also said that not less than 70 percent of new land supply should be allocated for affordable housing and medium and smaller apartments, while plots for villa construction are "strictly prohibited."
Effective from April 1, developers have to submit to local land watchdogs the expected starting and completion dates for their projects and they have to explain delays in writing. Those who fail to comply will be barred from land auctions for at least a year, the ministry said.
Land transfers in 70 major Chinese cities netted more than 1.08 trillion yuan (US$158 billion) last year, up 140 percent from 2008, according to China Index Academy.
China's urban property prices climbed 10.7 percent from a year ago in February, the fastest in 23 months, the National Bureau of Statistics said on Wednesday.
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