On the evening of February 10, 2022, it was
reported from Chinese social media that nationwide measures to supervise and
manage commercial housing pre-sale funds (hereinafter referred to as “Measures”)
have been recently formulated and promulgated, the real estate industry will
bring significant positive results in 2022.
As is known, there was
previously the "Administrative Measures for the Up-sale of Urban Commercial
Houses" promulgated in 1994, which stipulated that "specific measures for the
supervision of the early sale of commercial houses shall be developed by the
property management department" and "the competent construction administrative
departments of the provinces and autonomous districts, municipal administrative
departments for construction or administrative departments for real estate may
formulate detailed implementation rules in accordance with these Measures.”
The biggest difference
between the new "Measures" and the corresponding provisions of the 1994 "Administrative
Measures for the Presale of Urban Commercial Houses" is that the provisions for
presale funds are now clearly unified across the country's provinces, thus
facilitating the regulation of presale use of funds.
It is reported that now the "measures"
clearly stipulate that "pre-sale fund quota supervision is the" key quota
supervision "to be approved by the city and county city and rural construction
departments according to the project cost contract, etc. . which can provide the
quota of funds needed to complete the project. When the account funds reach the
supervision limit, the funds in excess of the limit can be withdrawn and freely
used by real estate enterprises.”
In 2021, following threats of
default by high-profile real estate companies, some local governments have had
problems overseeing presale funds, such as zero allocation of funds. The new
Measures will correct this behavior and provide real estate companies with an
easier cash flow situation.
First of all, reasonable capital
supervision is needed. Following default threats by housing companies in the
second half of last year, some cities tightened oversight of presale funds to
ward off risks. Currently, maintaining a moderate
liquidity of funds is an important measure to bring the industry out of the
crisis.
In this regard, the Deputy Director
of Research at the Index Division of the China Index Research Institute also
said that this will play a positive role in easing the current financial
pressure on enterprises and improving capital efficiency, which is conducive to
protecting the legitimate rights and interests of homebuyers and stabilizing the
real estate market. .
In 2022, the liquidity pressure
faced by real estate businesses is still relatively large. In the short term,
real estate businesses need to maintain capital liquidity through a variety of
means in order for the business to continue operating.
The implementation of the "measures"
will help to prudently manage and control the funds of real estate enterprises,
so that liquidity pressures of some real estate enterprises can be alleviated to
a certain extent