China to Establish System for Tracking Real Estate Ownership; Nationwide Real Estate Registration System Could Pave Way For Levying Broad Property Tax

China to Establish System for Tracking Real Estate Ownership

Nationwide Real Estate Registration System Could Pave Way For Levying Broad Property Tax

ESTHER FUNG

Jan. 13, 2014 7:10 a.m. ET

SHANGHAI—China plans to establish a national system for tracking real-estate ownership and sales transactions, a key step in its effort to tame a property sector that threatens to price many Chinese out of the housing market.A nationwide real-estate registration system could pave the way for levying a broad property tax in China for the first time. It could also help Beijing crack down on government officials and others who buy and own multiple properties despite restrictions on ownership.

“This is a tough task,” said Xu Deming, vice minister of land and resources, at a work meeting on Saturday, according to the ministry’s website. China has to carry this out to safeguard the interests of the public and to ensure sustainable economic growth, Mr. Xu said.

He didn’t give details on whether such registrations would include the ownership of commercial property in addition to residential property. Such a system would make it easier for the authorities to detect and tax multiple property ownership.

Currently there are many local registries and systems that aren’t linked, making it difficult to determine who owns what. In November, the State Council, the country’s cabinet, said real-estate registration processes that had been supervised by nine government departments would be combined into a single system overseen by the Ministry of Land and Resources.

Officials see property taxes as a sustainable solution to control speculation and keep the already large gap between rich and poor from widening. It is currently in place on a trial basis in Shanghai and Chongqing, but policy makers said they would expand it to more cities.

Average housing prices in 100 Chinese cities rose 11.5% in December from the same month a year earlier, according to private data provider China Real Estate Index System. Over the same period, housing prices in Beijing and Shanghai rose 28.3% and 15.6% respectively

Analysts said a property tax could address the issue of empty apartments kept off the rental market. A property tax would give owners of spare properties more incentive to rent them out. Still, they say the thorny issue of privacy has hindered the progress of such efforts.

In recent years, court cases of individuals owning multiple properties have also driven calls for more transparency on property ownership. In September, Gong Aiai, nicknamed “Sister House” in China, was sentenced to three years in prison for forging identification documents that allowed her to purchase 44 properties.

At the same weekend meeting, Jiang Daming, China’s minister of land and resources, said farmland and the production of food must not be reduced while carrying out land reforms. The official Xinhua news agency said authorities would restrict the purchase of rural land by rural residents, citing Mr. Jiang.

At a key policy meeting in November, Communist Party leaders said they wanted to make it easier for farmers to transfer their land, with little details so far on how this would be carried out.

“Rural land reform still faces strong opposition at the current stage” said research firm NSBO Beijing. “We do not expect to see large changes for the land system in the short term.”