context: China's lucrative housing market is now too big to fail. High housing prices have become a major obstacle to continuing urbanisation as it is extremely expensive to find a place in major cities. As it becomes increasing difficult to live in big cities, people are either 'fleeing' cities or delaying other important life decisions like having children.
State Council's opinion on accelerating affordable rental housing development pledged support for affordable rental housing development with preferential land policies, fast-track approval, subsidies, tax and fee reduction, and financial support.
The appearance of the expression, 'encouraging diversified investors and supply channels', in high-level policy documents means the state hopes to encourage investment using market forces, points out Yan Yuejin 严跃进 E-housing China Research Institute.
Li Yujia 李宇嘉 Guangdong Housing Policy Research Centre says the document emphasises the mobilisation of low-cost land resources, such as idle land, to justify low rents. Despite that, Li maintains there are still obstacles to rental market development.
Real estate companies still want to develop commercial housing rather than rentals. The required water, power and gas upgrades, as well as fire safety inspections, will all require cooperation with various government agencies. Meanwhile, adds Li, the profitability of the rental market remains questionable. For all these reasons, private companies are not enthusiastic about participating. SOEs could take the lead, but that is still questionable, argues Li.
Apart from policy support, State Council is also granting companies providing rental housing a 1.5 percent value-added tax rebate and a 4 percent real estate tax rebate.