In China, when people pay for homes from developers, they essentially take over the lease on the land, which for residential property lasts 70 years. But the duration clock starts ticking on the day the developers, rather than home buyers, take use of the land.

The owners of some 1,700 flats in the eastern city of Wenzhou are in such a dilemma now. Because of the lack of law, they have to give their homes back to the government. If they want to keep their residences, the home owners have to pay high land-transfer fees like property developers. For them, the fees are not affordable.

This legal black hole is often ignored by most homebuyers. But for business owners, the risk is particularly worrisome if they build on government land. Analysts say it is also one of the major uncertainties for international infrastructure investors to China.

What could be the light at the end of the tunnel is that many believe that by the time many of the leases expire, China may have already shifted to full private ownership of land.

In that case, the government would sell or auction the land permanently at competitive prices.

Go to Forum >>0 Comment(s)