Ren Zeping’s advice on real estate tax-according to the country’s simultaneous implementation of local conditions

Ren Zeping’s Advice on Real Estate Tax: Simultaneous Implementation in China

Objectively evaluate the 20-year historical achievements of real estate, major achievements and institutional changes Source: Zeping Macroeconomics Hengda Research Institute

The housing reform in 1998 released the power of the real marketization of real estate, created brilliant achievements in urbanization of human scale, rapid economic growth, and improvement of people’s livelihood. It also buried high housing prices, and land finance was waiting to be solved.

Real estate is related to national economy and people’s livelihood. It is the pillar industry of the national economy, the main source of local finance, the source of the financial crisis, the symbol of wealth, and the core of large-scale asset allocation.

  Twenty years of vicissitudes of history, great changes in history, standing at the starting point of the new era, and under the new positioning of “no housing and speculation”, how to promote the long-term stable and healthy development of the real estate market through the reform of the housing system and the construction of long-term mechanisms, is of national concern.
We have proposed a number of widely adopted standard analysis frameworks: “Long-term real estate looks at population, medium-term land, and short-term finance” (see Real Estate Cycle, People’s Publishing House).

This article makes a major objective evaluation of the achievements and achievements of the real estate reform over the past two decades, the historical contribution of real estate, confronts the problems and difficulties encountered in the process of internal real estate development, analyzes the underlying causes and institutional reasons, and provides suggestions for a new round of reform.

  First, historical evaluation of the achievements of the housing system reform in the past 20 years. In 1998, in response to the impact of the Asian financial turmoil, the housing reform started the commercial housing market.

State Council Document No. 23 called for the cessation of physical distribution of housing, the gradual implementation of the monetization of housing distribution, and the establishment and improvement of a multi-level urban housing supply system with affordable housing as the main body.

The curtain of market-oriented development of China’s real estate in the past two decades has thus begun.

  (1) Since the real estate industry is becoming mature in the boom, housing reform has benefited from urbanization and economic growth, and residential housing demand has been released in a concentrated manner.

From 1998 to 2018, China’s urbanization rate increased from 33.

4% rose to 59.

6%, an average annual increase of 1.

3 percentage points, housing demand increased rapidly; urban per capita disposable income increased by 11% annually, and residents’ purchasing power increased significantly.

  China’s real estate benchmark has prospered over a 20-year long cycle, and industry indicators have grown significantly.

Over the past 20 years, the floor space of newly started housing has increased from 200 million yuan to 20.

900 million flats, a gradual increase of 9.

3 times, compound annual growth rate of 12.


Real estate development investment completed from 0.

20 trillion to 12 million trillion, a gradual increase of 55.

8 times, with a compound annual growth rate of 22.


The floor space and sales amount of commercial housing were changed from 1.

200 million increase to 17.

200 million flats, 0.

3 trillion yuan to 15 trillion yuan, a gradual increase of 13.


7 times, compound annual growth rate of 14.

1%, 22.


  With the rapid development of the real estate industry, China’s real estate companies have grown from scratch, from state-owned enterprises to the rise of private enterprises.

In 2018, the number of real estate companies nationwide reached 9.

80,000, up from 2 in 1998.

40,000 increase 3.

Doubled, of which five real estate companies are among the top 500 in the world.

  The industry development model has gone from extensive to mature, and three trends have gradually emerged.

First, the industry concentration has gradually increased. The market share of the top 10, top 20 and top 50 housing companies in 2018 was 26 respectively.
9%, 37.
4%, 55.

1%, an increase of 17.7% over 2010


7 and 39 digits.

Secondly, the products are constantly upgraded and improved, and higher requirements have been put on garden greening, building material quality, home design and intelligent technology, and the proportion of refined decoration of the merged leading housing enterprises has exceeded 50%.

The third is the change in the supply structure. The report of the 19th National Congress of the Communist Party of China proposes to “accelerate the establishment of a multi-substance supply, multi-channel guarantee, and rent-purchase housing system to allow all people to live in a place.”Developers and other parties participate together to form a multi-channel supply model of commercial housing, rental housing, secure housing, and joint ownership.

  (2) Construction of the housing system In the course of exploration, the internal housing system will be gradually improved and gradual and steady reform measures will be taken.

In the early stage of the pilot project, the foundation of 98 housing reconstruction and expansion, and the follow-up of supporting policies, eventually formed a housing system with Chinese characteristics featuring housing finance, land, substitution, housing security, and housing supply as the five pillars in line with internal national conditions.

  First, the housing finance system is dominated by commercial loans and supplemented by provident fund loans.

1994 “Decision of the State Council on Deepening the Reform of the Urban Housing System”, the establishment of the housing provident fund system; 1998 “Notice of the State Council on Further Deepening the Reform of the Urban Housing System and Accelerating Housing Construction”, requiring all commercial banks to place personal housing loans in all urban housing,Commercial housing finance is advancing rapidly.

  Second, the main land supply system is linked to the auction.

The “Regulations on the Transfer of Urban Land Use Rights” of 1990 stipulated that in accordance with the principle of separation of ownership and use rights, agreements, tenders and auctions were adopted to grant urban land use rights.

In 2002, the Ministry of Land and Resources announced Decree No. 11 that clarified that land for business use must be auctioned and sold.

In 2010, Beijing piloted the land transfer method of “price limit, bid for land”. In 2011, the “Notice of the General Office of the State Council on Relevant Issues in Further Changing the Real Estate Market” proposed the promotion of the “price limit, bid for land” method to supply low and medium prices.For commercial residential land, scenic cities have begun to innovate land transfer methods, breaking the traditional model of bidding for the highest bid price.

  Third, the accumulation system of long-term ownership of homes is encouraged.

There are currently nine types of taxation for personally held and traded homes.

There are two types of compensation, property tax and land increase, which are levied according to the temporary regulations of 1986 and 1988, respectively, and are currently exempt from personal non-business housing.

The transaction totals 7 taxes, involving many types of taxes, and the tax rate is relatively high. However, it provides discounts for long-term holdings and family-only housing.

Among them, deed tax is levied in accordance with the 1997 Interim Regulations; supplementary and additional levies are levied in accordance with the 2016 “Notice on Comprehensively Launching the Pilot Reform of Levying Business Taxes”; Individuals are notified in accordance with the 1999 “Relevant Issues Concerning Personal Income Tax on Individuals Selling HousingLevy; stamp duty and land replacement are levied in accordance with the 2008 “Notice on Adjusting Accounting Policies for Real Estate Transaction Changes”.

  Fourthly, the housing security system covers public rental housing, affordable housing, shantytown reconstruction resettlement housing, and common property housing.

In 1998, the Housing Reform Document No. 23 proposed that “low-income families rent low-cost housing, low- and middle-income families buy affordable housing, and other high-income families buy leased commercial housing.” Low-rent housing and affordable housing are used to protect low- and middle-income income.Family live.

In 2010, the “Guiding Opinions on Accelerating the Development of Public Rental Housing” was issued, and public rental housing has become one of the ways of affordable housing, facing lower-middle income families.

In 2008, the central large-scale affordable housing project started the transformation of state-owned forest areas, reclamation areas and coal shantytowns. In 2010, the reconstruction of urban and state-owned industrial and mining shantytown areas was fully launched.Supplementary loans provided adequate cost and long-term stable funding support for large-scale shed reform and monetization resettlement nationwide.

Families with housing difficulties in shantytowns can improve their living conditions through two methods, namely, resettlement housing and monetized purchase of commercial housing.

In 2017, the Ministry of Housing and Development issued a document to support Beijing and Shanghai in conducting joint ownership housing trials, focusing on solving the “sandwich” housing problem.

Since then, a housing security supply system for different income groups has been established.

The rapid advancement of housing security legislation in 2019 will expand the design and basic institutional framework of national-scale housing security.

  Fifth, the housing supply system of both rent and purchase.

The leasing system has won awards since 2015.

In 2016, the State Council issued “Several Opinions on Accelerating the Development and Development of the Housing Leasing Market”. The report of the 19th National Congress of 2017 stated that “Insist on houses being resettled, not for speculative positioning.Channel protection, rent-and-purchase housing system “, clarifying the main framework and objectives of the housing supply system.

The pilot policy started in 2017 and was actively promoted. In July, the “Notice on Rapid Development of the Housing Leasing Market in Large and Medium-sized Cities with Net Inflows of Population” was issued, and 12 cities including Guangzhou and Shenzhen were selected for implementation of the pilot.The “Housing Pilot Program” was released, and it will be clear that pilot projects will be launched in 13 cities including Beijing to use collective construction land to build leased housing; in 2019, 16 cities including Nanjing will be shortlisted for central government-supported housing rental pilots.

  Second, objectively evaluate the historical contribution of real estate in the past two decades. (1) Real estate is a locomotive that drives variable economic growth. State Council Document No. 23 in 1998 clearly stated that “Promote the housing industry to become a new economic growth point”. State Council Document No. 18 in 2003 furtherPosition real estate as a pillar industry.

For more than 20 years, real estate has been well deserved as a locomotive for long-term economic development.

First, the industry is large and directly contributes to economic growth. Second, the industry chain is long and there are many related industries. Real estate investment and consumption drive a large number of upstream and downstream industries.

Among them, real estate development investment drives the construction industry and upstream and downstream manufacturing industries such as cement, steel, non-ferrous metals, and excavators; real estate consumption directly drives housing-related home appliances, furniture, home textiles, and decoration manufacturing; it also significantly drives finance.Tertiary industries such as media services, internet, and property management.

In 2018, the value added of the real estate industry as a proportion of GDP was 6.

At 6%, the contribution of real estate to the upstream and downstream related industries’ value-added accounted for 9% of GDP.

2%, the total ratio of the two is as high as 15.

8%.  Land transfer fees and income income provided by real estate have strongly supported local governments in large-scale infrastructure construction, industrial 杭州桑拿 reductions and reductions in land prices, and helped Chinese manufacturers stand out from international competition in the past 20 years.Make exports an important carriage for economic development.

From 2012 to 2018, the increase in floor prices of industrial land in 300 cities nationwide increased by only 4%.

2%, and the average floor price of residential land transactions increased by 178.


From 1998 to 2018, the national highway and railway mileage were respectively 127.

90,000 kilometers, 6.

60,000 kilometers increased to 4.85 million kilometers, 13.

20,000 kilometers.

  Real estate is one of the most important currency creation media, promoting credit expansion and economic development.

First, the financial systems of developing countries are dominated by indirect financing, real estate assets are of high quality and stable value, and create the basic conditions for credit expansion as the most important collateral.

At the end of 2018, mortgage loans accounted for 42% of the loan balances of listed banks, of which the 4 largest state-owned banks accounted for 45%.

Of the listed banks’ mortgage assets with mortgage loans exceeding 10 trillion, real estate accounts for 76%.


Second, in the rapid industrialization and urbanization stage, large-scale real estate development and construction is the engine of economic development and urban construction.

Investment in real estate projects is high, and the size of individual units is large, requiring credit support.

Real estate development loans accounted for the balance of loans to financial institutions in 20189.

5%, which is equivalent to the total investment in fixed assets18.

6% investment in real estate development.

Third, in housing market-oriented countries, housing loans are an important means to support residents’ purchase of housing and improve living conditions. They are the main debt of the residential sector and an important asset investment of financial institutions.

Take the United States, Japan, and Germany as examples. In 2017, the proportion of residential housing loans to total debt was 67.

4%, 64.

5% and 72.

4%, accounting for 24% of the loan balance of financial institutions.

1%, 24.

5% and 39.


The balance of annual residential housing loans in 2018 accounted for 56 of total household debt.

4%, accounting for 18 of the loan surplus of financial institutions.

9%, all lower than expected.

  (2) Real estate is the main financial source for large-scale infrastructure construction by local governments. After the tax-sharing reform in 1994, the power of affairs sank and the financial power moved upward. Local government financial pressures increased.

Real estate raises stable fiscal revenue for local governments.

  Real estate-related income is an important income for local governments.

There are mainly 11 types of real estate-related taxes, including deed tax, land occupation, urban land use tax, cultivated land occupation tax and real estate tax.

With the rapid development of the real estate market, the scale of real estate-related scales has continued to expand.

Real estate industry contributed local tax in 2017 1.

3 trillion, 5 special real estate taxes in 2018 totaled 1.

8 trillion, accounting for 19% of local income at that level, 23 respectively.


  The land transfer fee is the most important extra-budgetary revenue of the local government, and it is also the local government’s fiscal revenue at the highest level of the single item.

Through real estate, local governments realise the future value of domestic land use rights in a market-oriented manner.In 1998, the scale of land transfer fees was 507.

700 million yuan, accounting for 10% of local fiscal revenue.

2%, the scale of land transfer fees increased to 6 in 2018.

5 trillion yuan, accounting for 66% of local fiscal revenue.


  Land mortgage loans are a key source of external financing for city governments.

The huge land appreciation bonus brought by the development of real estate has greatly increased the value of land assets of local governments and has become an important credit collateral.

Taking 84 cities monitored by the Ministry of Natural Resources as an example, the land financing surplus reached 11 at the end of 15 years.

3 trillion yuan.

  (3) Real estate is the engine of gradual and rapid urbanization. Since the reform and opening up, gradual urbanization has entered a period of rapid development.

From 1978 to 2018, the urban population was 1.

700 million people grew to 8.

300 million people, an increase of 3 in 40 years.

8 times; from 1981 to 2017, the area of urban built-up areas nationwide increased from 7,438 square kilometers to 56,225 square kilometers, an increase of 6.

6 times.

  Real estate provides start-up capital for urban development.

For cities that are still in their infancy and rapid expansion, in addition to providing government and public services such as education and medical care, sanitation and greening, and public security and fire protection, it is even more urgent to expand the construction of infrastructure facilities such as road traffic, water and electrical heating supplies, and urban pipe networks.Internal income is difficult to provide sufficient funding.

From 1999 to 2018, the total local public budget expenditure at the local level totaled 148.

5 trillion, while the general public budget revenue at the local level is only 82.

7 trillion yuan.

Land transfer income has become an important source of revenue for local governments to start urban construction. From 1999 to 2018, national land transfer income totaled 43 trillion U.S. dollars, covering 29% of general public budget expenditure at the local level.

  Real estate helps non-agricultural population live and work in cities and towns.

One is to provide sufficient employment and higher income levels for the surplus agricultural labor.

Total number of migrant workers in 2018 2.

900 million people, including 18 in the construction industry.

6%; the average monthly salary in the construction industry is 4,209 yuan, which is 13 higher than the overall level of migrant workers.


With the rapid development of labor-intensive subdivisions such as property management services, real estate agencies, and long-term rental apartments, real estate will undertake more employment transfers of surplus agricultural labor.

The second is to provide housing for a large number of new urban populations.

From 1998 to 2018, it experienced the largest and accelerated urbanization process in world history, and the urbanization rate increased by 1 every year.

Three averages, the average annual resident population in cities and towns increased by 20 million.

Real estate mobilizes social resources to build houses on a large scale through marketization, which completely solves the problem of urban housing replacement in the era of welfare housing, and also effectively meets the new housing demand generated by rapid urbanization.

In 1995, there was only 66 houses in urban areas nationwide.

800 million flats, which increased significantly to 27.6 billion flats in 2018.

  Real estate accelerates the process of urban development and raises the level of urban development.

The first is to improve the appearance of the city.

Preliminary real estate projects have injected diversity into the urban landscape.

The transformation of shantytowns and old cities has improved the function and appearance of the city, but the capital needs are large, the coordination is fragile and high, and the support of housing enterprises is needed.

The second is to improve the pressure of unified government planning and construction. After the land transfer, some of the Dublin housing enterprises except the roads are completed.

For the development of commercial real estate projects, it is often necessary to build related landscaping, school hospitals, community commerce and other related supporting facilities within the red line.The third is to promote the construction and development of new areas and accelerate urban expansion.

Government departments need to learn from the rich professional development and operation and maintenance experience of housing companies to build popular business districts, beautiful residential areas and industrial parks with standardized operations.

  (IV) Real estate is a strong guarantee to improve the quality of residential living and realize consumption upgrade. The housing reform is a supply-side reform, which has significantly improved the efficiency of housing supply, stimulated the people’s pursuit of living quality, and demonstrated a new lifestyle.

  Housing reform has effectively improved the housing conditions of residents.

First, the area of family housing has increased significantly.

The per capita housing construction area in cities and towns was 18 in 1998.

7 square meters increased to 39 square meters in 2018, an increase of 1.

Doubled, with a compound annual growth rate of 3.


Second, the proportion of buildings has increased while the proportion of bungalows has decreased.

From 2000 to 2015, the proportion of bungalow households nationwide was 63.

1% recovered 38.

7%, an average annual decline of 1.

6 averages.

Third, housing facilities have improved significantly.

From 2000 to 2015, the proportion of households with independent kitchens in urban households was 84.

7% rose to 92.

4%, an average annual increase of 0.

5 digits; the proportion of households with independent toilets is 42.

1% rose to 74.

2%, an average annual increase of 2.

1 average.

  Real estate has promoted multi-level upgrading of residential housing consumption.

The first is to upgrade the concept of buying a house.

Buy public housing before 1998 to solve the problem of “have a house”. At that time, the concept of consumers was that there was a house, and most public houses did not have mature and standardized housing.

After 1998, he bought commercial houses with residential quarters, realizing the demand for convenient residential services.

The property management industry has also developed from scratch.

Entering the 21st century to purchase quality homes, it places high demands on garden greening, building material quality, and integrated decoration, and pursues a life concept that transcends vision and realizes a “good house”.

The second is the upgrading of consumption regions.

The cities are upgraded from low-energy cities to high-energy cities, from small and medium-sized towns to core cities and metropolitan areas in the region; in the cities, old houses and old houses in new areas are upgraded.

The third is the upgrading of consumer brands.

The demand for house purchases has shifted from local small and medium-sized house enterprises lacking construction standards and service guarantees to standardized operation and well-equipped brand housing enterprises.

From 2009 to 2018, the market share of TOP3, TOP10 and TOP20 real estate companies was 3.

5%, 8.

1% and 11.

8% increased to 12.

6%, 26.

9% and 37.


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