China Reassures Homeowners Worried About Land Rights

China Reassures Homeowners Worried About Land Rights

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The Henghe North neighborhood of Wenzhou, in eastern China. In a case that drew national interest, officials said that residents there would not have to pay a fee to extend the rights to the land under their homes.

Credit
Lam Yik Fei for The New York Times

BEIJING — China has clarified for the first time a closely watched issue over land rights that has caused uncertainty for the millions of Chinese who park their wealth in their homes.

Chinese officials said that a group of homeowners in the eastern city of Wenzhou would not have to pay a fee to extend the rights to the land under their residences. Homeowners in China own their actual dwellings 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.

In Wenzhou, the local government had told some homeowners whose 20-year leases had expired that they would have to pay a hefty fee to renew, and the situation there was being monitored closely across the country. Many Chinese homeowners — a bedrock of the country’s economy and growing consumer sector — worried that they would have to pay dearly to keep using the land under their homes.

The decision — announced on Friday by Wang Guanghua, China’s vice minister of land and resources — stops short of providing homeowners all over the country a clear legal framework on their land ownership rights. Nevertheless, it could set a precedent that would pave the way for similar moves in other cities.

At a news conference, Mr. Wang said that the measures were temporary and that the government was working on “relevant legal arrangements” for those holding 70-year leases, according to a transcript of the briefing on the ministry’s website. Much of China’s residential land is covered by 70-year leases.

The issue of land ownership rights came into focus in Wenzhou in April after the local government demanded that homeowners whose land-use rights had expired after 20 years pay fees of up to a third of the value of their homes before they could sell their apartments. The decision provoked protests from property owners in Wenzhou, a coastal city of eight million that was one of the first to set up private enterprise after the government opened up the economy in the late 1970s.

Xinhua, the main state news agency, hailed the government’s decision, calling it “one small step for Wenzhou, one giant leap for China.” Global Times, a nationalist tabloid owned by People’s Daily, the Chinese Communist Party’s official newspaper, said it was “the biggest news of the year.”

Land-use rights are set to expire in the cities of Qingdao, Jinan and Shenzhen, according to Xinhua.

The measures “conform to the expectations of the masses,” Xinhua said in a commentary on Saturday.

“For all citizens, it is transmitting spring’s first glow of warm air,” it said.

The number of residents affected by the 20-year land-use rights in Wenzhou is relatively small. China Youth Daily, a state-run news outlet, said that about 600 households had 20-year leases that expire next year and 1,700 others by 2019. But their property transactions have been in limbo because of the uncertainty over their land-use rights.

In 2007, China moved to reassure homeowners by requiring that local governments renew 70-year leases automatically. Yet the law did not make clear whether homeowners would have to pay for the renewal or what would happen to those with shorter leases.

China has one of the highest rates of homeownership in the world, about 90 percent. Many people see it as a good investment in a country that has not experienced a sustained housing slump. Homeownership also plays a social role: Buying a home is widely seen as part of getting married. And in the past two decades since the government has allowed private homeownership, many people rushed to buy homes without thinking of the legal issues governing their limited land-use rights.

A majority of them also expected that the government would grant them full ownership of their homes without repossession or a huge fee to renew their land rights. Those moves could hurt the Chinese property market and anger China’s middle class — an important constituency of the ruling Communist Party — that is richer, larger and more aware of its rights than ever before.

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