Home truths

China finally readies rules for property registry

Shanghai w

Chinese planners need more homeowner data

In 2011, China’s (then) security tsar Zhou Yongkang called for the creation of a database containing information on each of China’s 1.3 billion residents in an effort to improve “social management” (a government euphemism for its efforts to manage public dissent). At the time, Zhou said the system should contain such details as the person’s tax record and employment, as well as what property and vehicles they own.

Four years on, part of Zhou’s plan has finally come to fruition (though Zhou himself is now locked in a prison cell).

Right before the end of the year, the State Council finally unveiled the long-awaited property-registration system. The database will enable users to see how many properties a person owns as well as details about the dwellings.

The rules for the property-registration system will take effect on March 1, when local governments must begin the process of building their registration systems.

It remains unclear when new registrations under the system will begin but Xinhua is ready to strike a celebratory tone, saying that the database “could have dramatic effects on the real estate market by bringing more transparency”.

But how transparent will it be? It is hard to say because public access to the database will be limited. Government departments compiling the data are supposed to keep the information confidential, particularly in the case of “state secrets” (though how property ownership fits into this designation is harder to explain).

Moreover, don’t expect the database to be up and running any time soon. Land minister Jiang Daming admitted last year that China would need at least three years to establish a unified registration system for property nationwide and four years to create an information platform to manage the data.

Still, the database is a step forward should China decide to levy a property tax, a fiscal policy currently being tested out in Shanghai and Chongqing.

Industry observers have long argued that a property tax could help staunch speculation, and bring home prices down, since it raises the cost of holding property assets. Further, a property tax – likely levied annually on the value of the real estate held – offers the local government access to a stable new source of wealth, hence diversifying its revenues from land sales.

“A property tax will become inevitable, but only after a unified registration system is in place,” says Hu Jinghui, vice president of China’s major real estate agency “The data collected through the system will allow new taxes, such as a property tax and an inheritance tax.”

But industry insiders say the excitement over a pending property tax could be overdone. “Compiling the property-registration system is going to be complex and detailed, with many issues that need to be sorted out between different government departments. Therefore, levying a property tax is not going to take place in the short term,” Yang Rui, deputy general manager of Tospur, a consultancy, told Yangtze Evening News.

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