Six Ministries Encourage Use of PPP to Facilitate Local Public Rental Housing

Recently, the Ministry of Finance, Ministry of Housing and Urban-Rural Development and 4 other ministries have jointly issued a circular to promote the application of Public-Private Partnership (PPP) by the local governments to facilitate the investment, construction, operation and management of public rental housing.

The circular has definitely put forwards the policy system covering favorable financial policies, taxation policies, land use policies, acquisition policies and funding policies to support the development of PPP-based public rental housing and the local governments are required to organize the pilot and implementation work for PPP-based public rental housing project from 2015.

According to the circular, with the application of PPP mode in public rental housing investment, construction, operation and management, a local government shall first selects proper social capitals to establish a public rental housing project company. Such project company will sign relevant contract with the government and be responsible for the design, investment and construction, operation, maintenance and management of public rental housing project while obtaining reasonable investment return by the “rental paid by tenants” and necessary “governmental policy support” and undertaking corresponding risks within the term of contract. On the other hand, the government is responsible for providing policy support, regularly adjusting the rental of public rental housing and continuously improving the supervision of project construction and operation and maintenance quality. The project company is dissolved upon the expiry of the contract and any matters pending are to be solved as per the provisions of the contract. The government provides no guarantee or undertaking, and instead, only has limited liability towards the project company.

The circular clearly states that, the PPP-based investment, construction, operation and management are applied to the following projects: the public rental housing project constructed and operated solely by the government, commercial housing stock acquired by the government and meeting the conditions of public rental housing, suspended project meeting the conditions of public rental housing and with all necessary approvals and licenses and clear obligations and liabilities and the public rental housing project mainly constructed and operated by private enterprise.

The circular further states that the PPP-based public rental housing project must be included in the housing security planning and annual planning; the location of the housing project shall enjoy favorable transportation and well established public facilities such as schools and hospitals; the floor area of each signal apartment shall not be more than 60m²; the public rental housing has a stable group of security objects and the security objects are required to pay the rental as per the market rental level. (China Construction News)