An Analysis of the Reconstruction of Property Rights over Farmers' Homestead Land in China

As of the end of 2013, the national rural homestead land area was 170 million mu, accounting for about 54% of rural collective construction land. This is an important component of rural collective assets and also an important source of farmers' property rights.

I. Formation and Characteristics of the Homestead Land System

The rural homestead land system is a land system unique to China. For a period after the founding of New China, homestead land and farm houses belonged to farmers individually. Even though the Model Regulations for Advanced Agricultural Production Cooperatives issued in 1956 required that members must convert their privately owned land into cooperative collective ownership upon joining the cooperative, it also clearly stated that "members' existing grave sites and house foundations need not be contributed to the cooperative." In 1962, the Revised Draft Regulations on the Work of Rural People's Communes for the first time clearly stipulated that all land within the scope of the production team, including homestead land, belonged to the production team. In 1963, the Central Committee of the Communist Party of China issued the Notice on Supplementary Provisions Concerning Members' Homestead Land, and forwarded the document On Members' Homestead Land compiled by the Agriculture and Forestry Office of the State Council, reiterating that "members' homestead land, including both vacant homestead land with and without buildings, shall all belong to the production team collectively," and made new provisions: homestead land shall still be used by each household on a long-term basis, unchanged for the long term; the production team shall protect members' right of use and may not take it back or readjust it at will; attachments on the homestead land, such as houses, trees, sheds, pigsties, and latrines, shall forever belong to the members, and members have the right to buy, sell, and lease houses; members building new residences shall not be charged land prices regardless of whether the land is cultivated or not.

⟦NL> In the more than 50 years since 1963, although the framework of the rural homestead land system of "collective ownership, household use" has remained basically stable, in-depth analysis reveals that a series of adjustments have nevertheless occurred in the rural homestead land use right system:

First, the qualifications for obtaining homestead land use rights have been gradually tightened. For a long period, the state did not prohibit urban residents from conditionally obtaining rural homestead land use rights. The Regulations on the Administration of Land for Building in Villages and Towns issued in 1982 stipulated that "retired, resigned, or discharged workers and military personnel who return to their home villages to settle, and overseas Chinese who return to settle" could obtain homestead land. Article 41 of the Land Administration Law issued in 1986 stipulated that residents with non-agricultural urban household registration could use collectively owned land to build residences, with the additional conditions that approval by the county-level people's government was required, the land area must not exceed the standards set by the province, autonomous region, or municipality, and compensation fees and resettlement subsidies must be paid with reference to the standards for state construction land requisition. The 1990 Notice of the State Council Forwarding the State Land Administration Bureau's "Notice on Strengthening the Management of Rural Homestead Land" for the first time proposed that homestead land would not be approved for residents with non-agricultural household registration. The Land Administration Law revised in 1998 changed the subject applying for homestead land from "rural residents" to "rural villagers," and deleted the provision allowing residents with non-agricultural urban household registration to use collectively owned land to build residences. The 1999 Notice of the General Office of the State Council on Strengthening the Management of Land Transfers and Strictly Prohibiting Speculative Land Sales for the first time clearly proposed that "farmers' residences must not be sold to urban residents, nor shall urban residents be approved to occupy farmers' collective land to build residences, and relevant departments must not issue land use certificates or property certificates for illegally built and purchased residences." The 2004 Decision of the State Council on Deepening Reform and Strictly Managing Land expanded the prohibited subject scope from "urban residents" to "urban residents" (town and city residents), clearly proposing to "prohibit urban residents from purchasing homestead land in rural areas."

Second, the method of obtaining homestead land use rights underwent a tortuous change from free to paid and then back to free. During the people's commune period, members building new residences were provided land free of charge by the collective. In 1988, Dezhou in Shandong took the lead in piloting paid use of rural homestead land. By 1992, 28 provinces, autonomous regions, and municipalities, more than 1,200 counties, 6,000 townships, and about 130,000 administrative villages nationwide had implemented paid use of homestead land. In 1993, the State Council convened a nationwide teleconference on reducing farmers' burdens and announced the cancellation of rural homestead land paid use fees and rural homestead land excess occupation fees. Thereafter, although a free use system was implemented at the national level, some localities continued to practice paid use.

Third, the powers and functions of homestead land use rights have been gradually narrowed. The 1963 Notice of the Central Committee of the Communist Party of China on Supplementary Provisions Concerning Members' Homestead Land stipulated that members have the right to buy, sell, or lease houses, and after a house is sold, the homestead land use right is transferred to the new owner accordingly. However, the 1981 Emergency Notice of the State Council on Stopping the Occupation of Cultivated Land for Rural House Building emphasized that members allocated homestead land have only the right of use, and are not permitted to rent, buy, sell, or transfer it without authorization. Article 37 of the Guarantee Law promulgated in 1995 stipulated that homestead land use rights must not be mortgaged. Article 152 of the Property Law promulgated in 2007 stipulated that homestead land use rights have the functions of possession and use; Article 184 stipulated that homestead land use rights must not be mortgaged. Compared with complete usufructuary rights, it lacks the function of income; compared with land contractual management rights, it not only lacks the function of income but also lacks many forms of disposition functions.

After more than 50 years of development and evolution, the main characteristics of the current rural homestead land system can be summarized as: "collective ownership, member use; one household one homestead, area limits; free application, long-term occupation; separation of house and land, differentiated empowerment." "Collective ownership, member use" means that homestead land ownership belongs to the farmers' collective, and only members of the collective economic organization have the qualification to use it. "One household one homestead, area limits" means that members of the collective economic organization, with the family as the unit, may each household use one plot of homestead land, and the land area and floor area ratio must not exceed local regulations. "Free application, long-term occupation" means that members of the collective economic organization may, with the family as the unit, apply free of charge to use land owned by their collective, and occupy and use the homestead land indefinitely; the area is related to the number of family members at the time of application but cannot be allocated to individuals, and it is a family co-owned use right. "Separation of house and land, differentiated empowerment" means that houses and homestead land implement two separate property rights systems; farmers have complete rights of possession, use, income, and disposition over houses, but only possess, use, and limited disposition rights over homestead land (for example, it may be transferred to farming households in the same collective economic organization that meet the conditions for newly applying for homestead land, but after transfer they may no longer apply to use homestead land). This institutional arrangement has safeguarded farmers' right to housing, ensuring that every household, rich or poor, has a plot of homestead land for building their own home. But many problems also exist: free application for and occupation of homestead land has led to the widespread occurrence of the "tragedy of the commons," such as multiple homesteads per household and building new homes without demolishing old ones; as rural population outflow increases, the phenomenon of vacant farm houses intensifies; farmers' housing property rights and homestead land use rights are insufficient in their powers and functions, and farmers' property rights are constrained; extra-legal phenomena such as mortgages on farm houses and even homestead land, transfers beyond the permitted scope, "joint construction" between urban and rural residents, and construction of "small property rights houses" for external sale exist in large numbers, posing a severe challenge to the binding force of the law.

The Decision of the Third Plenary Session of the 18th Central Committee of the Communist Party of China clearly required to "safeguard farming households' usufructuary rights over homestead land, reform and improve the rural homestead land system, select a number of pilot sites, and prudently and steadily advance the mortgage, guarantee, and transfer of farmers' housing property rights." This actually put forward two interrelated but somewhat different reform tasks: first, reform of the homestead land system, the core of which is to safeguard farming households' usufructuary rights over homestead land, with the focus on whether, on the basis of already granting them the functions of "possession and use," to further grant them the function of "income" and limited granting of the function of "disposition"; second, reform of the housing property rights system, the core of which is to expand the transaction radius from circulation within the collective economic organization to circulation over a larger scope, with the focus on whether to include urban residents within the scope of transferees. Because house and land are difficult to separate, completing these two reform tasks must be based on the reconstruction of homestead land property rights.

II. Implementing Collective Ownership

Homestead land ownership belongs to the farmers' collective, which has been clear at the legal and policy level since 1962. However, under the institutional arrangement in which members of the collective economic organization freely possess long-term rights of occupation and use, the powers and functions of collective ownership have become very weak. Faced with infringing acts such as "multiple homesteads per household," occupation exceeding standards, and spontaneous transfers, collective economic organizations as landowners are often helpless. Against the background of expanding farmers' housing property rights and the powers and functions of homestead land use rights, accelerated changes in rural population structure, and a rising probability of housing transfer transactions, it is necessary to clarify and implement the powers and functions of homestead land ownership.