Leased lands

[danb]

Here is an interesting article about home ownership in China. One can own a house but normally only can lease (for 20-70 years) the land that the house stands on:

 

http://www.msn.com/en-us/news/world/what-good-is-owning-a-home-if-china-owns-the-land/ar-BBtIHoB

 

I had heard about this;

 

"Like every other homeowner in China, Mr. Chen and his neighbor own their homes but not the land underneath them. All land in China is owned by the government, which parcels it out to developers and homeowners through 20- to 70-year leases."

 

I didn't realize this;

 

"When the neighbor — whose surname is Wang — tried to sell her apartment, local officials told her that her lease on the land had expired. To sell her apartment, they told her, she would have to pay them one-third of the sales value."

 

Helps explains in part about China's policy for leasing land power;

 

"Giving land to the people would not be easy. Local governments in China do not have the power to levy taxes, so leasing land is one of the few ways they have to raise money."

 

Nice to know;

 

"In 2007, China moved to reassure homeowners by requiring local governments to renew 70-year leases automatically. Yet the law was silent on whether homeowners would have to pay for the renewal and what would happen to those with shorter leases."

 

Always wonder how this can be;

 

Ms. Wang and her family bought her 860-square-foot apartment three years ago for 1.4 million renminbi, or about $210,000 at today’s exchange rates.

 

How do the Chinese buy and are able to afford buy a house for 210,000 USD when the typical yearly income is normally less than 10,000 USD a year? ( I am guessing at the yearly income but I think I am in the ball park, anyone agree?) 210,000 divide by 10,000 dollars would represent 21 years of total savings one's year income. Am I missing part of the picture?

 

I thought this is an interesting subject, Housing ownership in China. Danb

 

 

 

 

 

 

 

 

[Randy W]

Under The Wuquan Fa - China's Property Law, enacted in 2007, you OWN your property, which is the house itself. The Wuquan Fa is patterned after western property laws, especially those of Germany - the Eminent Domain provisions are fairly generous. The new city park here in Yulin is nearly complete - except at the North and South ends, where there are residences. In order to tear down these residences, the city will need to relocate the people who live there, including my mother-in-law

I expect, just from looking around, that there is a LOT of land still OWNED by private owners that hasn't been converted for use by the state - including my wife's lot in downtown Yulin.

The "70 Year Lease", as near as I can tell, is NOT a lease - there is no one to hold the lease or make payments on it. Like I've said, you OWN your property. What happens is that "usage rights" are purchased by a builder to put up a building, who then turns around and SELLS the property (individual housing units) to buyers. The builders, after the homes are sold, are no longer part of the picture. Nothing can happen to the homes after the "expiration" of the "lease" without FULL compensation to the homeowners.

The people in the story are trying to take advantage of the "end" of the lease, and to make money off of it. It's not clear that they can do that, but yes. that's something the government NEEDS to sort out.

What would these people be paying for? - they already OWN their homes. The government CAN NOT repossess the homes without fully compensating the residents.

In the Global Times

How to maintain property in communist system looms large as land warrants expire

 

CFL topic - The Wuquan Fa - China's Property Law

Even in an urban zone, a 70 year lease is on the land, NOT on the building, and is automatically renewed. They can't take your property (either the land in a rural area or the building) without compensating you for it - at least by law. The property laws in China are patterned after those in the West, except that "property" in urban areas is defined as including the building, NOT the land underneath.

It seems to me that the 70 year leases on the underlying land are a separate issue entirely from individual home ownership, and the home ownership is not affected by the lease.

"Homes"/condominiums/flats/apartments are purchased, owned, inherited, and sold much the same as homes in other countries. This is my own interpretation, as the Property Law does not seem to address this directly.

[Greg.D.]

I read the NYT article this morning and was confused by it. For example, how can 70 year leases (since time of Mao?) already be expiring? And the article referred vaguely to shorter leases.

 

Also, upon a sale, does 70 years get put back on the meter?

 

WRT a poor family having the money to buy an apartment: I always thought it was generations of savings going into the purchase. So, I had the impression they were prodigious savers. People I know buying now get loans.

[Randy W]

I read the NYT article this morning and was confused by it. For example, how can 70 year leases (since time of Mao?) already be expiring? And the article referred vaguely to shorter leases.

 

Also, upon a sale, does 70 years get put back on the meter?

 

WRT a poor family having the money to buy an apartment: I always thought it was generations of savings going into the purchase. So, I had the impression they were prodigious savers. People I know buying now get loans.

 

 

The Wuquan Fa was enacted only recently - in 2007. Prior to that, the "leases" were as short as 20 years, as in the case that came up.

 

Last month, more than 600 property owners in Wenzhou, East China's Zhejiang Province suddenly found that the apartments they bought 20 years ago might not legitimately belong to them any more.

 

The problem surfaced when one property buyer surnamed Wang was stuck in the middle when buying an apartment in Lucheng district, as the ownership of the property couldn't be transferred to her. She and the owner were told by Wenzhou Land and Resources Bureau staff that the warrant for the land which the apartment was built on had expired on March 4.

 

The Wenzhou authorities told her that in order to finish the transaction, Wang would first have to pay a fee to extend the land warrant. The fee was calculated to be about 300,000 yuan ($46,140), almost half of the house's market price.

 

 

As near as I can tell, even when the "lease" expires. there is nothing that needs to be purchased, no "lease" that needs to be extended - nothing. Except a clarification of the policy concerning the "leases" and "automatic renewal". We'll see what they come up with.

Edited June 2, 2016 by Randy W (see edit history)

[Randy W]

I read the NYT article this morning and was confused by it. For example, how can 70 year leases (since time of Mao?) already be expiring? And the article referred vaguely to shorter leases.

 

Also, upon a sale, does 70 years get put back on the meter?

 

WRT a poor family having the money to buy an apartment: I always thought it was generations of savings going into the purchase. So, I had the impression they were prodigious savers. People I know buying now get loans.

 

 

This I can answer - no. The lease was issued to the builder, not the home owners. Our title shows the date of the original 70 year lease

[danb]

Greg, Mao has been around before 1943. Modern China birthday is 1949. So 70 years would be 2019. If that is when the first leases started out. Any one want to guess what will happen when the 70 year lease's deadline rolls over? Seems to me something has to happen. Does the lease expire, get renewed or what? Also I wonder if leases for rural areas and urban areas are administrated in the same manner. Danb

 

Randy I just saw your newest reply.

Edited June 2, 2016 by danb (see edit history)

[Randy W]

Greg, Mao has been around before 1943. Modern China birthday is 1949. So 70 years would be 2019. If that is when the first leases started out. Any one want to guess what will happen when the 70 year lease's deadline rolls over? Seems to me something has to happen. Does the lease expire, get renewed or what? Also I wonder if leases for rural areas and urban areas are administrated in the same manner. Danb

 

Randy I just saw your newest reply.

 

 

Home ownership is a fairly recent concept under the Communist government. More like the 1990's. Prior to that, housing was a benefit controlled by the employer.

[Randy W]

This seems to be the law which began the "leases" (from Chinasmack):

 

Chinese Land-Use Rights: What Happens After 70 Years?

 

In 1990 May 19, the People’s Republic of China State Council Decree No. 55 “The Provisional Regulations for the Provision and Transfer of People’s Republic of China on Urban State-Owned Land Use Rights” was announced and enacted, with Article 12 of the regulation stipulating: The highest number of years of land-use rights are to be determined by the following applications: 70 years for residential use. The government regulations stipulated that the state, companies, and individuals can pay for and trade usage-rights.

 

 

There IS no 70 year lease on my wife's land - she effectively OWNS it outright, although I couldn't tell you precisely what "OWNS" means.

[danb]

For more American, leased lands are something we don't normally need to consider. I was wondering about condo's, townhouses and trailer parks in the country and rural areas. How does that work? Also what about condos in the big city?

 

This seems to be the law which began the "leases" (from Chinasmack):

 

Chinese Land-Use Rights: What Happens After 70 Years?

 

 

 

 

I found some of the coments posted interesting and some amusing.

 

 

花開o [网易四川省乐山市网友]：

I’ve never worried about [what happens after] 70 years, what I worry about is how many year before my home collapses. To tell the truth, of the commercial real estate being built these days, how many will still be standing 70 years later? The majority of people probably have no idea!

网易广东省网友(14.18.*.*)：

The biggest enemy of the Chinese people are the “public power/authorities” who wear the coat of [act in the name of] “the country, the race, the people”. It leads everything, is not subject to normal restrictions, including the law. It stops at nothing, it’s everywhere, it’s omnipotent, and does whatever it pleases.

网易四川省成都市网友 ip：182.151.*.*: (responding to above)

I see the plan/calculation of public servants is like this:
1. In the first 30 years, housing prices soar, to clean out your several generations worth of savings.
2. In the last 40 years, real estate taxes are collected, forcing you to sell your home.
3. 70 years a cycle.

You know too much.

一北京老头一 [网易北京市网友]：

网易江苏省南京市网友 [达人达理]：

A certain Land and Resources Bureau has already given an official answer: “1. Land administration laws stipulate that the longest [land-use rights period] for residences is 70 year and there is no regulation that it has to be 70 years; 2. 40 years later, we don’t know if we’ll still exist in this world, so don’t think too far into the future.

网易福建省厦门市网友 [游宾]： (responding to above)

The first batch of housing are about to reach 70 years so there will be an answer soon enough.

Then what about the ancestral homes from the Qing Dynasty that were passed down? It’s long been over 70 years. Are they going to be confiscated?

唯一0755 [网易广东省深圳市网友]：

How many residential homes in China

can

be used for 70 years? Usually commercial residential real estate are designed with just a 30 year lifespan, and this doesn’t even factor in skimping on the work/shoddy construction and other man-made issues.

网易上海市浦东新区网友 ip：58.33.*.*:

When that time comes, we’ll once again struggle against local tyrants [land-owners] and split [redistribute] the land.

Edited June 2, 2016 by Randy W
fixed quote block (see edit history)

[Randy W]

For more American, leased lands are something we don't normally need to consider. I was wondering about condo's, townhouses and trailer parks in the country and rural areas. How does that work? Also what about condos in the big city?

 

Well, yes - if what you're wondering about is in the U.S.

 

Home ownership is basically the SAME - the property laws in China are based on those in the west.

 

It's just the WORDING in the Chinese law - the 70 year term WILL expire after 70 years - THEN what happens?

 

MY answer is - NOTHING! You will still own your home, and they CANNOT take it away, unless you are fully compensated.

 

But they may very well come up with a fee or a tax for "lease renewal". My guess is that, if so, it will be FAR less than what you will have paid in property taxes and fees over a comparable number of years in the U.S.

 

AND . . . I CAN tell you that the homes from the Qing dynasty DO NOT HAVE a lease. That is, they are on land which is effectively OWNED by the people who live there.

[Randy W]

Progress made recently on this issue - from the SCMP

 

China tries to reassure homeowners over land rights

Ministry tells urban owners that they won’t have to pay more after their land rights expire, but analysts say the issue must be clarified in a law

 

But the country’s so-called land public ownership system, which offers the state unrestricted power to seize land and profit from deals, could continue to haunt the country’s quest for long-term stability and prosperity, according to analysts.

Under China’s existing law, all urban land is owned by the state and cannot be traded, but in reality it is often in the hands of local governments. They can sell “land use rights” of 20 to 70 years tenure to developers.

Millions of urban Chinese households own private property, but it means there is a legal limbo on what happens if the rights to land use expire.

 

In Wenzhou, a city in the coastal province of Zhejiang, the local government shocked the country earlier this year by demanding local residents pay a hefty fee to renew the “land use rights” for their homes when their 20-year leases expired.

After months of quarrels and debate, China’s land ministry came out last week and made it clear that homeowners need not apply to renew or pay fees to extend land leases.

However, the ministry also said the arrangement was only temporary before a formal law addressed the issue.

“The response was mainly to stabilise market expectations and reduce disturbance to house transactions,” said Yan Yuejing, a research chief at E-house China R&D Institute.

 

 

So my conclusion seems to still hold - that there is no such thing as a "70 year lease" as an actual lease. People OWN their homes. There is NO ONE, no entity, who would HOLD a 70 year lease - it is simply an administrative term referring to the granting of access and usage rights to the builder for the original development. Once the individual units are sold, the developer is no longer part of the picture.

[Randy W]

 

For more American, leased lands are something we don't normally need to consider. I was wondering about condo's, townhouses and trailer parks in the country and rural areas. How does that work? Also what about condos in the big city?

 

Well, yes - if what you're wondering about is in the U.S.

 

Home ownership is basically the SAME - the property laws in China are based on those in the west.

 

It's just the WORDING in the Chinese law - the 70 year term WILL expire after 70 years - THEN what happens?

 

MY answer is - NOTHING! You will still own your home, and they CANNOT take it away, unless you are fully compensated.

 

But they may very well come up with a fee or a tax for "lease renewal". My guess is that, if so, it will be FAR less than what you will have paid in property taxes and fees over a comparable number of years in the U.S.

 

AND . . . I CAN tell you that the homes from the Qing dynasty DO NOT HAVE a lease. That is, they are on land which is effectively OWNED by the people who live there.

 

 

 

. . . and the Eminent Domain policy is fairly generous - Dinner for 15,000