The People’s Bank of China (PBOC) and the China Banking Regulatory Commission (CBRC) are urging rigorous credit management on commercial property projects to curb possible risks that could threaten the banking sector.
The policy will have significant impact on property developers as financing will be more difficult.
No loan will be given to developers to cover land transfer costs.
Loans for land reserve acquisition will be secured by property developers through the use of a mortgage and require a legal land use certificate.
The amount of the loan shall be less than 70% of the estimated value of the project.
The credit period will be confined to two years.
No credit of any kind will be offered to projects where land had been idle for two years or more.
Provision of credit will be more cautious to government-approved construction projects that have not started within a year after a land concession contract was signed.
This would also apply to projects where its developed land area was less than one-third of the total, or where the investment was less than a quarter of the total within a year after starting construction.
Source: China View