'Houses with limited property rights' pose a real problem

'Houses with limited property rights - investment for the future." Over the past couple of weeks, such advertisements in big, black fonts have hit Beijing. And the prices of such houses have been rising almost everyday. In eastern Tongzhou district, for example, the prices of some houses have risen by hundreds of thousands of yuan overnight. The craze stopped only when the Ministry of Land and Resources and the Ministry of Housing and Urban-Rural Development issued an emergency notice.

What are houses with limited property rights and why have they suddenly become so popular? The answer lies in China's dual land-use system: urban land is owned by the State and rural land by collectives, and they are meant for different uses. While houses built on urban land with permits are saleable, it is illegal to build houses on agricultural land. Besides, houses built on rural land earmarked for construction can only be sold to local residents.

But the rapid urbanization of China, with fast-expanding cities and skyrocketing realty prices, has also seen apartment buildings being built and sold in rural areas. Since such buildings are built without official permission, professional designs and quality control, the sale and purchase of the apartments in them are illegal. Worse, people who buy them cannot get any ownership certificate from the State. That's the reason they are called "houses with limited property rights".

But despite being illegal, the sale and ownership of such houses has continued unabated over the past few years. In fact, it is estimated that more than 30 percent of all urban houses belong to this category. According to media reports, by the end of 2011, the city of Shenzhen in Guangdong province alone had more than 379,400 such houses, or about 49.27 percent of the total. The data may be inaccurate but the existence of a large number of houses with limited property rights is a problem that nobody can deny.

The existence of a huge number of houses with limited property rights has disturbed the market order. Developers who build such houses do not follow the government's construction plans or pay attention to quality control. Worse, if the houses are sold, their unclear ownership could cause disputes and thus pose a threat to the social order.

Many people thought such houses would be "legalized" after the Third Plenary Session of the 18th Communist Party of China Central Committee announced that "collectively owned rural business construction land" would enjoy the same status as urban land in the market. Many misunderstood the statement as an indication for "legalizing" houses with limited property rights and made a beeline over the past weeks to buy them, pushing up their prices.