China to combat profiteering in home selling

10:50, April 28, 2011      

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China may further tighten regulation of its real estate market. The National Development and Reform Commission (NDRC) is mulling over rules to combat profiteering in the property sector, in hopes of keeping housing prices at a reasonable level, Xu Kunlin, director of the NDRC's Department of Price Supervision, said in an interview with the Xinhua News Agency on April 26.

The "Provisions on the Price Marking of Commercial Housing," which has drawn nationwide attention, will come into effect on May 1. Xu said that in addition to the provisions, the central government will also introduce a series of polices, especially anti-profiteering policies, to regulate housing prices.

China enacted the "Interim Regulations on Curbing Exorbitant Profits" in 1995. According to the regulations, the State Council's price department shall cap profit margins of commodities and services that have a great impact on the national economy and social development and are closely linked with people's lives, in order to prevent exorbitant profits in certain sectors.

"We are studying costs, profits, and prices in the property sector, and are planning to crack down on the profiteering of real estate developers according to the specific conditions of China's real estate industry and the useful experience of foreign countries," Xu said.

In March 2011, the NDRC issued the "Provisions on the Price Marking of Commercial Housing," requiring real estate developers to clearly mark the sales prices of houses and not to raise prices at will. Xu said that releasing the provisions is aimed at strengthening the price regulation in the real estate market and addressing issues in the sales of commercial houses such as disordered price marking, unclear information and price frauds so as to ensure the proper price marking in the real estate market and to protect the legitimate interests and rights of consumers.

The NDRC issued a special circular in March 28 requiring provincial or municipal-level price departments to step up formulating the specific rules on implementing the price marking provisions, to try to establish systems such as a housing price registration system and a "one-price" system for commercial housing sales and to explore effective price marking management methods.

Xu said that following the implementation of the "Provisions on the Price Marking of Commercial Housing," the NDRC will form inspection teams to conduct special investigations on the price marking of commercial houses in major regions or developed by certain real estate developers. The investigations will focus on practices of real estate developers failing to clearly mark sales prices, mark a price per house, mark prices inconsistent with that they have announced, offer incomplete price information or charge extra fees besides the prices marked. Such practices also include the use of illegal price marking or pricing means to misinform buyers.

He stressed, "It is necessary to impose heavier punishments on real estate developers involved in typical illegal price marking cases with severe consequences and a serious social impact as well as to publicly expose them in order to warn other real estate developers."

Some real estate developers said that they might avoid the "Provisions on the Price Marking of Commercial Housing" through increasing the declared value. However, Xu said that the provisions will not become a mere scrap of paper. Xu revealed that after the implementation of the provisions, a series of policy measures including the anti-profiteering law will be launched one after another to regulate prices of the real estate industry.

Xu said that the original intention and the policy objective of implementing anti-profiteering in the field of commercial housing is to keep commercial housing prices at a reasonable level, including reasonable cost, reasonable profits and reasonable prices.

"We hope to keep real estate away from fraud and excessive profits through continuously improving the real estate price policy in order to effectively safeguard the legitimate rights and interests of consumers and promote the healthy and orderly development of the real estate market," Xu said.

Xu also stressed that commercial housing prices have a direct impact on people's livelihood. Therefore, the government will firmly control the real estate market and support the reasonable housing consumption of residents.

By People's Daily Online

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