Would you want the government as a housemate?

Buying an apartment in China is tough. Prices in first-tier cities keep skyrocketing but demand never seems to fall. Instead, potential buyers just get more anxious about missing out.

Chinese authorities fear a market crash, but would also like to avoid having prices spiral entirely out of reach for the middle class. A raft of measures have been tried, from pushing investment in less developed cities to tinkering with the hukou (household registration) system.

The latest effort is pretty blunt in comparison: Beijing’s municipal government has mooted a plan that would allow it to become a co-investor in properties so house buyers can afford to stop renting and put down a deposit.

Dubbed a “joint property ownership scheme,” the scheme would make the government a minority stakeholder in each apartment. Participants would face certain restrictions when selling, with only limited participation opportunities.

The plan comes as Guangzhou and Beijing have made moves to allow renters the same education rights as homeowners. Previously, only registered property owners could enrol their children in local district schools. This resulted in tiny plots of land near popular schools going for astronomical sums of money to parents eager to ensure eligibility—one uninhabitable passageway was listed last year for 1.5 million RMB (227,000 USD), the price so high because its owners would be eligible to send their children to the prestigious Beijing First Experimental Primary School nearby.

The rights of landholders versus renters raises the question of what “ownership” under the Chinese system means when the only purchase option available is a long-term lease of the land rights, generally for around 70 years. Some provinces indicated that extensions are available, but require new land-use contracts and associated transfer fees.

As yet, it’s still an issue for legal experts and landowners to speculate over; for all its current necessity to both the economy and marriage market, China’s property ladder is only a few decades old, and the magic seven-decade milestone is still some way off.

“Close Quarters” is a story from our issue, “Modern Hermit”. To read the entire issue, become a subscriber and receive the full magazine. Alternatively, you can purchase the digital version from the iTunes Store.


David Dawson is the former deputy editor of The World of Chinese.

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