Reforms to improve access to affordable housing

Reforms to be rolled out in 2014 by the Ministry of Housing and Urban-rural Development aim to provide better access to affordable housing and more choices for those in need, according to a senior housing official.

The two main areas of reform are the combining of existing application procedures for affordable housing and the provision of government subsidies to help young couples and single people purchase property, said Qi Ji, the vice-minister of housing and urban-rural development, on Sunday.

The first reform entails synchronizing the two separated management systems for low-rent and public rental housing into one, making a single application procedure to cover both categories of housing.

This means that people applying for low-rent accommodation will also automatically be put on the waiting list for public rental accommodation. If their economic situation improves while they are waiting for an apartment to become available, disqualifying them from the low-rent option, they will still be eligible for public housing at normal prices.

In the existing system, such people have to make an entirely new application once their first application fails.

"Through these reforms, we are aiming to help residents obtain affordable housing easily," Qi said. "Moreover, the families can choose different units if they move to other districts in the city, rather than commuting long distances every day."

The synchronized management system has already been implemented in some provinces, such as Hebei.

As well as merging the two application systems, Hebei has included an additional application system since April for the purchase of affordable housing, creating one combined system with multiple applications.

According to one local government document, the system has covered all 11 cities in the province by December.

"The pilot programs have saved huge time and energy for both the applicants and governments," said an official in charge of affordable housing projects in the province.

He added that two separate systems confused both the applicants and officials at the grassroots level.

Another major reform expected in 2014 is building units to suit singles and young couples, who have less money to purchase housing.

In Beijing, the reforms will mean that units with one or two bedrooms will sell cheaper to people who cannot afford the high property prices but urgently need somewhere to live. The lower prices will be achieved by government subsidies, with authorities purchasing a share in the property to cut the cost to the owner-occupier.

The ministry will promote the system of subsidized housing across more cities next year, the vice-minister said.

Yin Bocheng, a real estate researcher at Fudan University in Shanghai, said that the system has its attractions, but will also place "a big burden" on local governments.

"Such units are in great demand in big cities. But other cities that copy the practice in Beijing may encounter difficulties because these programs require huge amounts of government finance," he said.

Many governments rely on the revenue coming from land deals, while these new units require the governments to sell them cheaper or give developers tax relief, which may slash their revenue and increase spending, said Yin.

Affordable-housing programs have become a priority for governments, with the aim of building 36 million units nationwide by 2015. Construction has been started on 24 million units so far.