[photopress:real_estate_cajing_1.jpg,full,alignright]The government is closing a loophole that allowed developers to obtain land-use certificates before securing adequate capital.
Property developers in China face tougher regulations aimed at strengthening control over industrial land and payment procedures for buying land-use rights. According to the new regulations, a property developer may not obtain a land-use certificate before clearing all payments for the targeted property.
China already had required, under a 2002 version of the regulations, payment clearance before granting land-use certificates to property developers. Despite the rules, developers who used split-schedule or default payment systems managed to win usage rights for more land than they could actually afford.
In a related move in late September, just before China’s National Day holiday week, the central bank and banking regulators ordered commercial banks to stop writing property developer loans that allowed lending fees to be paid with land-use rights instead of cash.