China has tightened land-sale regulations for developers in its latest attempt to take some of the steam out of the potentially overheating property market.
The new rules include the first nationwide minimum down payment on land purchases from the government, and follow a vow from Beijing earlier this week to curb what it calls an "overly fast" rise in property prices by boosting the supply of cheap public housing and redeveloping slum areas.(…)
The new rules include a minimum down payment of 50% on land purchases from the government.
Local-level governments previously asked developers to put down 20%-30% of the value of the land in such deals, analysts said.
The new policy also requires developers to completely pay off land purchases from the government within one year of a sale agreement, with a one-year extension allowed for certain "special projects."
Developers won’t be permitted to buy new land if they fail to pay off a land purchase in time, according to the statement.(…)
Shares of property developers tumbled sharply after the new rules were issued. China Vanke Co., China’s largest property developer by market value, ended down 6%, while Gemdale Corp. dropped 7.8%. The benchmark Shanghai Composite Index ended down 2.1% at 3113.89 and the Shenzhen Composite Index fell 3.5% to 1127.88.(…)
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