China scraps tax for some affordable-home builders

BEIJING: China will exempt a segment of the low-income housing sector from tax in a drive to boost supply, according to a government statement.

Builders and owners of "public rent homes" will be exempt from land use tax, stamp tax, deed tax and value-added tax for the next three years, the state tax office and finance ministry said late on Tuesday, Sept 27.

Public rent homes are usually smaller than 60 sq m and are rented to a wide range of people on low incomes, including migrant workers and new graduates.

The measure is the latest volley in a concerted campaign to contain property inflation. House prices in major cities have soared beyond the reach of ordinary earners, ringing alarm bells in the corridors of power.

Beijing introduced an array of restrictions in April, including higher down payments and an end to mortgage discounts, to dampen speculative demand. It also made it harder for developers to raise funds.

As the market has shown signs of a rebound in recent weeks, the government has redoubled its efforts to enforce these curbs.

State media reported on Tuesday, that regulators were making spot checks to ensure banks were strictly complying with government curbs on mortgages for non-owner-occupied homes.

On the supply side of the equation, on top of the new tax breaks, the government has ordered construction of all affordable housing projects to begin by the end of September.

The market is awash with speculation, fueled by regular state media reports, that China may soon launch fresh tightening measures, including a long-awaited property tax. -- Reuters