l The Housing System of China has experienced the process of welfare-oriented public housing distribution system, featured as widely-covering and low-level, to Housing Marketization. The Housing Marketization improved people’s housing conditions quickly. However, it is accompanied by the expanding of housing gaps well as the withdrawing of government’s housing security function.
l From the year of 2007, government re-emphasized its responsibility of housing security, followed by the attempt to establish a new housing security system and to strengthen the housing security level.
l There are series of problems for current housing security system.
ü As an organic union of housing system, land system and housing secruty system, this union is in shortage of top design and shortsighted.
ü The current housing security system deteriorate the social justice, especially those affordable housing, sold non-publicly, has turned out to be the “legitimate channel” to transfer the state owned resource into private property for government and state owned departments.
ü The government’s responsibility of housing security is not clearly defined, and the current system does not cover those who need housing security mostly but covers those who are not most urgently longing for houses in terms of income and housing conditions, inevitably leading to the expanding rather than diminishing the housing gap.
ü The contemporary housing security system distorts the land and property market and severely damages the efficiency of market.
ü The implementation mechanism of current housing security system is imperfect, i.e. the mechanisms of fund-raising, financing, operating and monitoring are insufficient to demand.
ü The external institutional environment is unfavorable for the housing supply and housing security: the distorted development mode and land administrative system increase the demand of security housing, and houses with limited property, actually play the role of housing security function, are considered illegal.
l Recently, the emphase of security housing has began to shift to public rental housing, whose huge capital demand leads to a enormous finance pressure for local governments for the majority of the investment is made by local governments. The primary problems when executing policies comprise: (1) the project of security housing cannot be completed in time for the shortage of fund; (2) local governments collect rents of several years in one lump sum to alleviate the finance pressure; (3) public rental house and low-rent house are sold to recover the fund. These deeds not only tarnish the government reputation, but also distort the nature of security housing, resulting in the poor function and low efficiency of the security.
l The necessity and theory foundation of housing security: from a wide world view, most countries agree that the right of habitation belongs to basic human rights so that they providehousing to different degree. According to the principle of decreasing marginal utility, when redistributing in reasonable scope, the loss of utility of the rich is less than that gained of the poor, therefore the total social utility is increasing. Thus, it is justifiable to “robbing” the rich to help the poor, and contrarily, if not, the housing security is meaningless.
l The principle of designing China’s housing security system
ü Principle of justice—seizing the rich to help the poor, but not vice versa; diminishing rather than enlarging housing gap.
ü Principle of efficiency—intervencing the market as little as possible so that minimizing the waste of resources.
ü Principle of basic security—supplying only necessary housing conditions, but not tempting the unqualified people to pursue the interest of security housing.
ü Principle of universal security—protecting those qualified as wide as possible; and eliminating the discrimination policy, especially equally treat people without the standard of Hukou system.
ü Principle of multiple levels security.
l The framework design of China’s housing security system
ü The top design
n Separate the land utilization propose administration and the property administration. Launch the Approval System concerning the change of land utilization propose. The administration of land property should respect to the market.Trade according to the market principle.
n The supply and demand of housing should be dominated by market. Government should and be obliged to establish the housing security system when market failure happens, but this intervention has to be restricted so that essential damage to the house market can be prevented
n Encourage house renting market and enthusiastically cultivate house renting market, and cut the cost of house renting.
n The role of those House with limited property can be played sufficiently so that house price can be restrained and the housing security can be enhanced. Constitute the rule and strengthen the regulation in the near future while unify the management system of housing property in the long run.
ü The responsibility and function of government
n Reasonably define the responsibility of government’s housing securityand establish the concept of “limited government”, indicating that government should not be thoroughly responsible for people’s housing but the market should be, while the government should only cover those people in bad need.
n The responsibility of government concerning the housing security has to be specific and accountable.
n Distinguish the responsibility of government and the approach to assume the responsibility. Government can take its responsibility in various ways in different ways, like fund-raising, financing, construction, distribution, operationand other chains of housing security. According to distinct situation, government can provide the house directly, or help those in need obtain the house in market.
ü The scope of security: The standard and range of security should not be made too high in the beginning and the relatively lower standard can be seated, which can be remodified with the development of economy. At the present, the people that included in this securitysystem are those of lowest income and confronted with inhabitation difficulties (without considering Hukou system). If the budget is enouth, the low-income, lower-middle-income housing for needy families can be covered in terms of income. The security standard for urban Hukou population is recommended at an average of 15 square meters / person, while the security standard for urban population without residential Hukou can be based on an average 10 square meters / person.
ü The degree of security: Hierarchical security system must be established.Different degrees of rent subsidy can be designed according to income and standard of housing.The feasible subsidy degrees consist of 80%, 50%, 25% and 0%. The 0% subsidy means the housing of stable rents or the limited rent growth is also a kind of subsidy. Besides, the stable rent benefits to restrain the considerable fluctuation of housing rent.
ü The form of security: the housing security can be classified from two perspectives: property and subsidy. In the perspective of property, housing security can be classified as ownership security and use rights security. In the perspective of subsidy, the formality includes money subsidy and material object subsidy. The goal of reform of China’s housing security should be the union of ownership security and money subsidy. The supply of non-public sold Affordable Houses should be stopped immediately, and in the near future, gradually eliminate the security housing of ownership rights while expanding the security Housing in use rights, progressively suspend the subsidy of material object while extending the form of money subsidy.
ü The relationship between the security housing and Commercial Housing: from the experience of developed countries, this relationship went through three phases: independent commercial house market paralleled with closed security housing system; the relatively closed security housing system which can conditionally connect to the commercial house market; the unified real estate market accompanied with security housing dominated by money subsidy. Nowadays, China’s security housing system located in the stage of transferring from the first to the second one, and in the future, this system should further step into the third stage, that is, progressively towards the unified real estate market, predominated by money subsidy as the security housing system.
ü The land supply system of security housing: in the long term, once the housing security system with the money subsidy as the characteristic is established, there are no longer land supply problems specific for security housing. In present, the supply of land for Affordable Housing should be terminated immediately, includingthe “self use land” and new appropriated land. In theshort and medium run, the transparency of land supply should be improved, and gradually abate the land supply by means of government appropriation along with the expansion of money subsidy.
ü The funding and financing of security housing system: it is equivalent to support security housing by adopting the one-time or annual financing approaches if the capital market is effective, which is the basis for government to solve the financing problems by market mechanism. Therefore, government should change ideas and assume the responsibility through multiple measures. The responsibility of financing can be shifted to enterprises, while the government supports the market according to its own security responsibility. Thus, more security housing can be supported by the same amount of fund, which is not only the reformation of service pattern but also the innovation of financing.
ü The mechanism of security housing: firstly, the management and operation should be separated when government directly supply the security houses; secondly, considering the shortage of fund, government should support and it is encouraged to provide and operate security housing through market mechnism, including BOT, TOT, purchasing the houses with property rights or usage rights and then reuse them for security housing, and making policy to encourage existing houses to enter rental housing market; finally, government should nurture healthy and stable rental housing market, lead the market to increase supply, encourage the development of commercial and public welfare housing leasing agencies.
l Suggestions are provided for the implementing mechanisms of security housing including fund-raising, financing, operation and supervision.
l The goal of housing security system reform: the current the housing security system is a closed operating system which is independent of real estate market, and through the progressive reform, a transitive phase of relatively closed but conditionally connected with real estate market security system will be experienced, and finally a unified real estate market will be formed.Housing security is implemented by market and predominated by money subsidy.