China issues reforms in home sales and property financing

In a bid to accelerate the shift toward a new property development model and strengthen safeguards for homebuyers, China rolled out a slew of policy documents on Friday spanning home sales and property financing, tightening presale rules, promoting completed-home sales and widening funding channels.

Among them, a notice jointly issued by the Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources and the National Financial Regulatory Administration focuses on sales reform. It directs local governments to advance completed-home sales in an orderly manner, promoting a "what you see is what you get" model to curb delivery risks.

Under the notice, priority should be given to completed-home sales for projects on newly sold residential land and for developments on previously sold plots that have yet to obtain construction planning permits. For projects that continue to rely on presales, each residential building must reach structural completion before units can be marketed.

To protect buyers during the period from payment to handover, the notice requires down payments, mortgage proceeds and other purchase funds to be placed in regulated accounts. It also promotes "handover with certificate", allowing buyers to receive ownership certificates when they take possession of their homes.

The same emphasis on delivery is also reshaping housing finance. In a separate guideline issued on Friday, the People's Bank of China and the National Financial Regulatory Administration said mortgage funds for newly built homes sold after completion should be released only after the sale has been registered with the authorities.

For presold properties, lenders must wait until the project's completion has been formally registered, pushing disbursement beyond the prevailing "topping-out" stage.

"Deferring mortgage disbursement will help guard against financial risks arising from delayed home deliveries," the central bank said.

The guideline also extends the maximum term of individual home loans from 30 to 40 years, giving borrowers and lenders greater flexibility. The exact maturity will be agreed between the homebuyer and the commercial bank.

According to Yan Yuejin, deputy head of the Shanghai-based E-House China R&D Institute, the sales policy is designed to build a sounder housing market around a simple priority: protecting homebuyers at every stage of the purchase.

Selling completed homes allows buyers to inspect what they are purchasing, narrowing the information gap between them and developers and bringing greater transparency to the transaction, Yan said.

The timing also reflects a change in housing supply and demand, Yan said. As the market shifts from concerns about whether homes are available to questions about whether they are well-built, housing quality has become more important, he added.

"Reforming sales rules and expanding completed-home sales could thus improve the buying experience, raise housing quality and make transactions safer as the property sector enters a new phase," Yan said.

Coordinated efforts are also underway to better meet property developers' reasonable financing needs. In trial measures released on Friday, the NFRA said banks should distinguish between risks at the real estate enterprise and project levels, with loan reviews focusing more on the viability of individual projects, a move analysts said would help ensure that reasonable financing needs of developers of all forms of ownership would receive equal treatment.

Meanwhile, authorities are working to broaden the sector's financing channels beyond bank lending. In another guideline issued on Friday, the China Securities Regulatory Commission said it would improve financing arrangements involving equities, bonds, asset-backed securities and real estate investment trusts, channeling more capital toward quality homes that are safe, comfortable, green and smart.

The combined measures have put into practice the direction set by China's 15th Five-Year Plan (2026-30), which calls for higher-quality development of the property sector, a new development model and stronger rules for property development, financing and sales.

"The moves show that the institutional framework for that model is taking shape," Yan said.