Shanghai Alters Property Rules

New laws will limit residents of China's most cosmopolitan city in seeking compensation.

2011.01.18
shanghaiproperty305.jpg High rise residential buildings in Shanghai, Jan. 14, 2011.
AFP

Authorities in Shanghai have issued a new set of rules for evictions and demolition of residential properties, limiting the time period for which compensation is payable to evictees to 70 years.

After 70 years, property owners in the fast-developing city will lose any right to be compensated for their lost homes if they are demolished to make way for redevelopment, according to official media reports.

While some property would attract a "residual" payment if demolished after its lease term is up, some properties would attract no compensation at all if they were in key municipal development zones, the new rules state.

Officials told reporters on Tuesday that the move was "in the public interest," sparking anger among Chinese netizens.

"Don't use public interests as an excuse to carry out plunder," commented a Qingdao-based netizen on the Tencent Internet portal.

Another comment, from a netizen based in Nanchang, said that "public interest" was too vague a concept. "It's hard to say what that really means, and you don't explain it," the user commented on the report.

Radical move

Shanghai's move is seen as radical, even among officials in other cities. An official surnamed Yang in the Shenzhen Land Bureau said the move would cause problems for buyers.

"Shanghai is now saying that when the lease is up after 70 years, you must win approval for an extension of the lease if you want to continue living there," Yang said.

"But if they have some other use for it, then they can just repossess it," he said.

"Any homeowners or tenants who don't renegotiate the lease will have their homes repossessed. This is obviously unreasonable," he added.

"Who's going to sign up for a 70 year lease? The people who make these decisions obviously haven't thought about that," Yang added.

Beijing's Xinjing News said in an editorial on Monday that the new rules in Shanghai play havoc with the concepts of public and private property.

Private property enjoys theoretical protection under China's Constitution, but the ultimate ownership of land in China still rests with the state.

Residents often complain that existing leasehold contracts are flouted by local officials and developers keen to swell revenue coffers with lucrative land deals.

"This is a legislative mentality that doesn't take private property rights seriously," the paper said, adding that the new rules run counter to the rule of law.

"These are regressive measures which are going to cause a lot of worry to the people," the editorial said.

No basis for rules

Beijing Science and Technology University professor Hu Xingdou said there is scant basis in law for the new rules.

"This is in contravention of the Property Law, which clearly states that 70-year leases are renewed automatically," Hu said.

"The current land market system in China right now is very unfair," he added.

"People spend a lot of money, and they are only able to purchase a 70-year tenure."

He said the Chinese system is different from that of developed countries, where the purchase of a home usually entails the purchase of the land it was built on.

"The land and the home go together," Hu said. "Chinese homes are so expensive already, that this is extremely unfair."

Soaring prices

Housing prices soared by 40 percent or more last year in Beijing and Shanghai, sparking renewed fears of a bubble in the property market.

China's property market is still absorbing the effects of the government's 4 trillion yuan (U.S. $602 billion) stimulus program in 2009, which boosted the economy and fueled a building boom.

In Beijing, prices of units in new residential buildings jumped 42 percent to 20,328 yuan per square meter (U.S. $286 per square foot) in 2010, Shanghai Securities News reported on Jan. 5.

Over the same period, prices shot up by 40 percent in Shanghai, 33 percent in Shenzhen, and 23 percent in Guangzhou, China Real Estate Information reported.

China already sees thousands of "mass incidents" across the country every year, according to official statistics, many of which are protests or sit-ins linked to forced evictions, allegations of corruption, and disputes over rural land sales.

Reported by Qiao Long for RFA's Mandarin service. Translated and written in English by Luisetta Mudie.

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