City Guideline Gives Priority to Sales of Ready-to-Use Homes

Shanghai has rolled out a fresh guideline for the real estate market, encouraging property projects to sell ready-to-use homes from now on, 10 days after the State Council, China's Cabinet, set the tone to promote new homes that are fully decorated.

The guideline, jointly released on Monday by the city's housing, planning and financial authorities, rules that commercial housing projects should prioritize ready-to-use property sales. Meanwhile, developers can sign business contracts with homebuyers once they secure the construction permit, deploying a deposit rate of up to 3 percent of the total housing prices.

The new rules are meant to provide certainty for both developers, who can be more confident with financing locked in advance, and consumers, with the ready-to-use homes representing "what you see is what you get" to minimize housing delivery risks.

At the same time, Shanghai will introduce a lead bank system for real estate projects, in a bid to tighten capital management. Developers have to open a dedicated account in the lead bank for the project and allocate all capital, including development loans, corporate equity contributions and deposits from homebuyers, into the account to guarantee their proper usage.

Support for housing development loans will also be scaled up, getting tilted toward ready-to-use properties and high-quality projects featuring safety, comfort, green design and smart functions. Banks should set appropriate disbursement timelines and limits based on project progress, releasing funds in tranches. Loan capital should be channeled through dedicated lead bank accounts for exclusive project construction purposes.

Financing channels for developers will be broadened as well, with support for corporate bonds, asset-backed securitization and real estate investment trusts.

Besides, the city will implement an integrated mechanism covering land planning, reserves, supplies and utilization, allowing instalments for land-transfer fees with a down payment of no less than half of the total and one year to pay the rest. Detailed rules will be published in land transfer announcements.

Shanghai plans to supply 25-28 million square meters of new commercial housing between 2026 and 2030 while renovating 30-40 million square meters of old residential communities by 2030, according to the city's 15th Five-Year Plan for housing and urban-rural development.

This is in contrast to the actual supply of 42 million square meters of new commercial housing during the 14th Five-Year Plan period (2021-2025), when the city also renovated 68 million square meters of old residential communities.