Controversy over change to land use regulations
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A new provision at a land auction which might lead to property owners losing their usage rights after a 70-year span has led to heated discussion.
Last week, the application form at a land auction in Shanghai showed that after the usage rights expire, the government will take back the land.
Developers and construction companies have to bid for usage rights on land, whether it is for residential or commercial use.
The Property Use Transfer Regulation, which came into effect in 1990, stipulated that residential properties have 70 years of usage rights, which start from the day a developer gains the land certificate from the local government. The time span of a land plot for commercial or entertainment use is 40 years.
Shanghai's State-owned Property Transfer Pre-Application Announcement, published in October last year, also stated that "the land will be taken back by the government" after the usage span of the land expires.
"If the provision comes true, this could be a big blow to the real estate market, because no one would want their property to be taken back off them 70 years," said Sky Xue, an analyst at China Real Estate Information.
There is still no official explanation for the new provision.
"This might only be a trial to deal with land when the usage right expires after 70 years," noted Song Huiyong, research director of Shanghai Centaline Property Consultants.
The Property Law, which came into effect inn October 2007, stipulated that land usage rights can be renewed after the maturity date, but gives no details about the related cost of -renewing usage rights.
"This is clearly a conflict with the 'withdrawal' regulation (for land usage). China's land management regulation may still go through changes in the future and no one knows exactly how it will turn out," E-House (China) Holdings analyst Fu Qi noted.
Sales of land parcels soared 70 percent to 2.7 trillion yuan in 2010 compared to 2009, as land supply increased and -urbanization continued.
A total of 4.28 billion square meters of land plots were released last year - 1.8 billion square meters were for residential development, said the Ministry of Land and Resources.
