Tuesday, September 02, 2014

New policy: registering real estate - Sara Hsu

Sara Hsu
+Sara Hsu 
The newly established Bureau of Real Estate Registration might signal a new track for the central government to control its unruly real estate sector, writes financial analyst Sara Hsu in the Diplomat. "The real estate registration system will increase transparency in property rights, which is certainly an improvement over the murkiness of today’s diverse and localized registration platforms."

Sara Hsu:
China has recently established a new Bureau of Real Estate Registration as part of its effort to enhance land management regulations. The bureau is charged with drafting and enforcing regulations on land management and property registration, resolving land disputes, and issuing certificates for forest land and island use. The creation of this institution complements draft legislation on real estate registration and a national property audit launched by the National Audit Office under the direction of the cabinet to enhance property rights and reduce corruption associated with land sales. 
The Bureau of Real Estate Registration will roll out a national system of real estate registration pending final approval of a draft proposal circulated by the State Council. The real estate registration system will not be transparent to the public, but will be visible to government officials who need the information for legal and financial matters. This will include the land, public security, civil affairs, tax, business, finance, audit, statistics and other departments. According to the draft legislation, the system will combine data submitted at the national, provincial, municipal, and county levels. Real property, including collectively owned land, homes and buildings, forests, land including farmland and grasslands, construction land use rights, general land use rights, water use rights, easement, mortgages, and other real estate rights will be registered... 
A pilot program for property taxes levied on housing in Shanghai and Chongqing was initiated in 2011, but expansion of this program has been stalled in order to focus on generating national property tax legislation. The pilot programs have been criticized for failing to slow down a heady increase in property prices. However, it was noted that the pilot programs had limited impact in slowing the property market due to restrictions and very low tax rates. 
While there no guarantee that the real estate registration system will stop the practice of insufficiently compensated land takings, the lure of property tax revenue, if it is large enough, may wean local governments away from one-time land sales in favor of ongoing tax income. What is more, the real estate registration system will increase transparency in property rights, which is certainly an improvement over the murkiness of today’s diverse and localized registration platforms. The Bureau of Real Estate Registration and its associated pending regulations therefore show promise, and are key components of the leadership’s reform agenda.
More in the Diplomat.

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