China has for the first time clarified a closely watched issue of land rights that has caused uncertainty for the millions of Chinese who park their wealth in their homes.
Chinese officials said that a group of homeowners in the eastern city of Wenzhou would not have to pay a fee to extend the rights to the land under their residences.
Homeowners in China own their dwellings, but not the land under them. All land in China is owned by the government, which parcels it out to developers and homeowners through 20-to-70-year leases.
In Wenzhou, the local government had told some homeowners whose 20-year leases had expired that they would have to pay a large fee to renew, and the situation was being monitored closely across the country.
Many Chinese homeowners, a bedrock of the country’s economy and growing consumer sector, worried that they would have to pay dearly to keep using the land under their homes.
The decision, announced on Friday last week by Chinese Land and Resources Vice Minister Wang Guanghua (王廣華), stops short of providing homeowners nationwide a clear legal framework on land ownership rights. Nevertheless, it could pave the way for similar moves in other cities.
At a news conference, Wang said that the measures were temporary and that the government was working on “relevant legal arrangements” for those holding 70-year leases, according to a transcript of the briefing on the ministry’s Web site.
Much of China’s residential land is covered by 70-year leases.
Land ownership rights became a focus in Wenzhou in April when the local government demanded that homeowners whose land-use rights had expired after 20 years pay fees of up to a third of the value of their homes before they could sell them. The decision provoked protests from property owners in Wenzhou, a coastal city of 8 million that was one of the first areas to establish private enterprise after the Chinese government opened the economy in the late 1970s.
Xinhua news agency hailed the government’s decision as “one small step for Wenzhou, one giant leap for China.”
The Global Times, a nationalist tabloid owned by the People’s Daily, the Chinese Communist Party’s official newspaper, called it “the biggest news of the year.”
Land-use rights are set to expire in Qingdao, Jinan and Shenzhen, Xinhua said.
The measures “conform to the expectations of the masses,” it said in a commentary on Saturday. “For all citizens, it is transmitting spring’s first glow of warm air.”
The number of residents affected by the 20-year land-use rights in Wenzhou is relatively small. The China Youth Daily, a state-run newspaper, said about 600 households had 20-year leases expiring next year and 1,700 others had such leases expiring by 2019.
However, their property transactions have been in limbo because of the uncertainty over the land-use rights.
In 2007, China moved to reassure homeowners by requiring that local governments renew 70-year leases automatically. Yet the law did not make clear whether homeowners would have to pay for the renewal or what would happen to those with shorter leases.
China has one of the highest rates of homeownership in the world, about 90 percent. Many people see it as a good investment in a country that has not had a sustained housing slump. Homeownership also plays a social role: Buying a home is widely seen as part of getting married.
In the past two decades, since the government has allowed private homeownership, many people have rushed to buy homes without considering the legal issues governing their limited land-use rights.
A majority of them expected the government to grant them full ownership of their homes without repossession or a huge fee to renew their land rights. Those moves could hurt the Chinese property market and anger the middle class, which is an important constituency of the ruling Chinese Communist Party and is richer, larger and more aware of its rights than ever before.
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