People's Bank of China and China Banking Regulatory Commission, Circular on Promoting Land Conservation and Improving the Efficiency of Land Use through Financial Means

Issued: July 29 2008

Main Contents: Article 5 of the Circular prohibits the granting of any type of loan for the development of commercial real property on collective land in rural areas; any property loan to urban residents for purchase of residential premises on collective land in rural areas; or loans specifically used for paying land grant fees to real property developers. In the case of mortgage loans for land reserve, a legal land use certificate shall be required; the maximum loan amount may not exceed 70% of the appraised value of the mortgaged property; and the term of the loan shall not exceed two years in principle. With respect to real property projects recognised by a land and resources department where the enterprise has developed less than one-third of the land or has made less than one-quarter of the investment and one year has lapsed since the construction commencement date specified in the land grant contract, the granting of loans shall be prudent, and loan extension and revolving credit shall be rigorously controlled. Where the construction land for a real property project is deemed by a land and resources department as having been left idle for two years or more, granting of loans for real property development or any type of mortgage loans (including asset preservation services) that are created over the construction land of such property projects is prohibited (Article 6).

Related Legislation: Circular on Promoting Land Conservation and Improving the Efficiency of Land Use, Jan 3 2008