Third round of measures hits the property sector

On 26 January, the Office of the State Council issued the Further Improving Regulatory Measures for the Real Estate Market Notice (Guo Ban Fa [2011] No. 1), which contained measures known as the “eight rules”. This was followed, the next day, by the publication by the Ministry of Finance and the State Administration of Taxation of the Revising Business Tax Policy for the Transfer of Individual Housing Notice (Cai Shui [2011] No.12). These two notices represent the third round of regulatory measures taken by the State Council to cool the property market, following the introduction of earlier measures in April and September 2010. Coupled with this is the announcement of a pilot scheme for the levy of a property tax on individual housing in Chongqing and Shanghai, suggesting that the long-awaited property tax is finally becoming a reality.

The eight rules

Increase the responsibilities of local governments. Local governments will be required to set a reasonable target to control the prices of new homes in their areas in 2011, and publish it in the first quarter of the year.

Step up the construction of subsidized housing. More subsidized housing projects will be carried out in different localities by various means such as new construction, reconstruction, purchase and long-term lease. Efforts will be stepped up to increase the supply of public-sector rented housing.

Business Law Digest is compiled with the assistance of Haiwen & Partners. The authors can be emailed at baochen@haiwen-law.com. Readers should not act on this information without seeking professional legal advice.