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Local govts should buy, rent out homes: experts

By Li Xiaoshu (Global Times)

08:12, May 28, 2012

The slowdown in China's economy could be eased if local governments are encouraged to buy residential housing and rent it to residents, economists and analysts suggested yesterday, raising hopes that the government could implement a modest easing in parts of the market.

"The Chinese government faces a dilemma with its tight property curbs, which will go against public interests if loosened, and threaten the overall economic stability if enforced," economist and State Council advisor Chen Quansheng was quoted by the Kunming Daily as saying at an economic forum held over the weekend in Kunming, capital of Yunnan Province.

"One of the solutions is to attach an equal focus to both property purchasing and renting," Chen said.

Chen said the local governments could collect up to 2 trillion yuan ($317 billion) from multiple channels, including public funds, private equity funds, local bonds and bank loans, to purchase completed apartment buildings and rent them out, according to the newspaper.

The local governments could also extend the current three-year lease terms to 10 or 20 years and grant the tenants preemptive rights to buy the homes at revaluated prices with depreciation taken into account, Chen noted.

"The measure would not only give a boost to cash-starved property developers to cushion the impact of sluggish private property investment in the overall economy, it would also effectively support the affordable housing program," Hui Jianqiang, a property researcher at the Shanghai-based E-house China Research and Development Institute, told the Global Times yesterday.

However, "it remains debatable whether policymakers would approve such proposals," Chen Guoqiang, deputy director of the China Real Estate Society, told the Global Times. "As a form of administrative intervention, it might affect the allocation of resources and cause corruption."

The remarks came after Ministry of Finance said last Thursday it had given 66 billion yuan to local governments to help build public housing for rent, one of five categories of State-subsidized affordable housing.

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