China has unveiled a major policy package to reform its commercial housing sales system, with three government departments jointly issuing a circular on Friday outlining steps to regulate presale conditions, strengthen fund supervision, and promote the sales of completed new homes.

The circular, released by the Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources, and the National Financial Regulatory Administration (NFRA), calls on local authorities to steadily advance reforms to the commercial housing sales system and accelerate efforts to foster a new development model for the real estate sector.

Tighter presale rules

For commercial housing projects offered for presale, the main structure of each building should be topped out, the circular notes. Local authorities are also required to strengthen supervision of presale funds to ensure their safety, effectively guard against housing delivery risks, and protect the legitimate rights and interests of homebuyers.

For projects that had obtained construction project planning permits before the circular took effect and are offered for presale, existing policies and regulations will continue to apply.

Push for completed home sales

The circular urges local authorities to advance the sales of completed new homes in an effective and orderly manner, so as to realize the goal of "what you see is what you get" and reduce disputes over housing delivery.

Local authorities should improve supporting policies concerning land supply and financial support, optimize the management of project development and construction, sales and real estate registration, and promote the issuance of real property ownership certificates upon housing delivery.

Credit policy support

To support the reforms, the People's Bank of China and the NFRA issued a separate guideline on improving real estate credit management on the same day. The guideline extends development loan terms – up to five years for presale projects and seven years for completed new home sales and commercial property projects.

For completed new homes, personal housing loans should be issued after sales registration, while those for presale homes should be issued only after project completion is registered. The maximum term of personal housing loans has also been raised from 30 years to 40 years.

(With input from Xinhua)