Special Bonds for Land Reserve and Acquiring Existing Homes

Good news suddenly emerges in the real estate market!

On October 12th, Deputy Minister of Finance Liao Min stated at a press conference held by the State Council Information Office that the Ministry of Finance is actively studying and introducing policies and measures conducive to the stable development of the real estate market. These include allowing special bonds to be used for land reserves, supporting the acquisition of existing housing, optimizing the supply of affordable housing, and timely optimizing and improving relevant tax policies.

Liao Min introduced that in terms of resolving existing risks, the financial department has cooperated in issuing a special loan policy for "ensuring delivery of housing", providing interest subsidies for 350 billion yuan of special loans, and has pre-allocated 6.2 billion yuan of interest subsidy funds since last year to support the protection of the legitimate rights and interests of homebuyers.

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Reducing the cost of purchasing a home and optimizing the supply of affordable housing to prevent and resolve real estate risks

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Liao Min said that real estate is a matter of great concern to everyone. The Ministry of Finance and relevant departments are working together to focus on promoting the balance of supply and demand in the real estate market, continuously optimizing fiscal and tax policies, and promoting the real estate industry to return to a stable and healthy development track. The policies that have been introduced include three aspects: demand side, supply side, and risk resolution.

On the demand side, the main focus is on supporting the satisfaction of residents' diverse housing needs and reducing the cost of purchasing a home. This includes the introduction of a phased individual income tax refund policy for "selling old and buying new" home purchases. For example, if an existing home is sold for 2 million yuan with an original value of 1 million yuan, the individual income tax payable would be about 200,000 yuan. However, if another home worth more than 2 million yuan is purchased within a year, the 200,000 yuan of individual income tax already paid can be fully refunded.

Furthermore, the Ministry of Finance, in cooperation with relevant departments, has reduced the interest rate on housing provident fund loans by 0.25 percentage points. It is estimated that this could save about 20 billion yuan in interest expenses on personal housing provident fund loans nationwide each year. These two policies have played an important role in reducing the housing purchase burden on residents and increasing housing demand.

On the supply side, the main focus is on supporting the optimization of the supply of affordable housing and ensuring the basic livelihood of the people. In the past three years, the central finance has arranged 212.4 billion yuan for affordable housing projects and 280 billion yuan for central budgetary investment. It has also coordinated with local government special bonds to support the construction of 6.66 million units of various types of affordable housing to meet the basic housing needs of low-income urban groups, new citizens, and young people.

At the same time, it also supports the active and steady advancement of the renovation of 160,000 old residential areas, benefiting 27.25 million households, and supports the renovation of 4.2 million households in shantytowns, urban villages, and dilapidated urban houses, playing an important role in stabilizing investment, promoting consumption, and benefiting the people's livelihood.In terms of resolving existing risks, the fiscal department has cooperated in introducing a special loan policy for "preserving the delivery of buildings," providing interest subsidies for 350 billion yuan in special loans, and has pre-allocated 6.2 billion yuan in interest subsidy funds since last year to support the protection of homebuyers' legal rights and interests. The Ministry of Finance has also cooperated in promoting the battle to ensure the delivery of houses, digesting existing commercial housing and idle land, preventing and resolving real estate risks, and stabilizing social expectations.

Special bonds are allowed to be used for land reserves and to make good use of special bonds to purchase existing commercial housing.

Regarding the next steps in fiscal measures, Liao Min said that the Ministry of Finance will adhere to strict control of new increments, optimization of the existing stock, and improvement of quality, actively studying and introducing policies and measures that are conducive to the stable development of the real estate market. There are mainly three aspects to consider:

First, allow special bonds to be used for land reserves. This is mainly considering that there is a relatively large amount of idle undeveloped land in various places at present. The policy supports local governments in using special bonds to repurchase idle existing land that meets the conditions. Regions that truly need it can also use it for new land reserve projects. This policy can not only regulate the supply and demand relationship in the land market, reduce idle land, and enhance the control ability of land supply, but also help alleviate the liquidity and debt pressure of local governments and real estate companies.

Second, support the purchase of existing housing and optimize the supply of affordable housing. Considering that there is a relatively large amount of housing that has been built and is waiting to be sold, we mainly take two support measures: one is to make good use of special bonds to purchase existing commercial housing as affordable housing in various places; the other is to continue to make good use of the subsidy funds for affordable housing projects. The original funds were mainly used to support the collection of affordable housing sources through new construction. Now, the direction of support is optimized and adjusted, appropriately reducing the scale of new construction and supporting localities to collect more affordable housing sources through the digestion of existing housing.

Through these two measures, it can not only digest existing commercial housing, promote the balance of supply and demand in the real estate market, but also optimize the supply of affordable housing and meet the housing needs of the vast majority of low and middle-income groups.

Third, promptly optimize and improve relevant tax policies. In accordance with the decision-making and deployment of the Party Central Committee, we are urgently studying and clarifying the value-added tax and land value-added tax policies that are connected with the cancellation of the standards for ordinary and non-ordinary residential buildings. Next, we will further study and increase support, adjust and optimize relevant tax policies, and promote the stable and healthy development of the real estate market.

Liao Min said that promoting the stable development of the real estate market is a systematic project that requires the joint efforts of various policies. The Ministry of Finance will continue to strengthen the coordination of fiscal policy with other policies, the linkage between the central and local governments, and the connection between new and old policies, to play a combination of punches and unswervingly promote the real estate market to stop falling and stabilize.