Large amounts of land sit idle for long periods, with government causes accounting for over 50%
Large amounts of land have been left idle for long periods, breeding various economic and social problems, and have therefore drawn great attention from leaders at all levels and the competent departments.
The "2014 China Land and Resources Bulletin" released by the Ministry of Land and Resources on April 22 states: from 2009 to 2013, among the construction land already supplied nationwide, idle land amounted to 70,200 hectares. And at the National Land and Resources Work Conference held on January 15 this year, Minister of Land and Resources Jiang Daming said that in 2014 the Ministry of Land and Resources cleared out 1 million mu of idle land over the year.
Regarding the problem of idle land, at the State Council executive meeting held in February this year, Premier Li Keqiang demanded that "in response to the problems found by auditing and inspection, iron-fisted measures must be taken, accountability must be enforced, and it is necessary both to investigate and deal with misconduct such as irregularities in the management of revenue and expenditure from land transfers, and to correct the various forms of inaction reflected in idle land". According to another report, as early as April 1999, the Ministry of Land and Resources adopted the Measures for the Disposal of Idle Land, and revised them in May 2012. This year, the Ministry of Land and Resources also designated 11 cities and counties nationwide, including Nanjing, Jiaxing, Haining, Linyi, Heze, Yichang and Chongqing, to pilot the advancement of credit system construction in the land market.
Since the central government attaches great importance to the problem of idle land, and the Ministry of Land and Resources has also issued relevant systems and policies to regulate and rectify it, the reporter learned during interviews that implementation in some places is not ideal and relevant policies are difficult to carry out. Why is this?
Government causes account for a large share of idle land
Lawyer Zheng Xin of Beijing Haotian Xinhe Law Firm has long studied legal issues related to land. In an interview with a reporter from China Business Times, he said that the causes of idle land are mainly enterprise causes and government causes. For idle land caused by enterprises, public attention is relatively high, and people generally believe that idle land occurs because enterprises hoard land to drive up housing prices and maximize profits, but in fact the problem of idle land caused by government reasons should not be underestimated either. According to official statements, more than 50% of idle land is caused by government reasons. The Ministry of Land and Resources issued the Measures for the Disposal of Idle Land, whose original intent was to prevent enterprises from hoarding land, increase market supply, stabilize housing prices, improve land use efficiency, and avoid waste of land. However, unfavorable policies of some local governments, lack of good demolition and relocation plans, insufficient funds, and misconduct and inaction can all lead to idle land. In addition, although the Ministry of Land and Resources has issued relevant policies, the lack of implementing rules makes the policies lack operability, which is also one of the reasons hindering policy implementation.
In the blacklist previously circulated by the Ministry of Land and Resources, Beijing, Guangdong, Hainan and other places became the hardest-hit areas for idle land.
In the central villa area of Houshayu Town, Shunyi District, Beijing, housing prices have exceeded 100,000 yuan per sq m, but right there, a plot of more than 700 mu of land has been idle for about 5 years, and to this day it has not been dealt with in any way.
The plot is located in Xibaixinzhuang, Houshayu Town, Shunyi District, totaling more than 700 mu, and was acquired around 2010 by three development enterprises: Beijing Yushuntong Real Estate Development Co., Ltd. (hereinafter referred to as Yushuntong Company), Beijing Mengke Real Estate Co., Ltd. (hereinafter referred to as Mengke Real Estate Company), and Beijing Bishuiyuan Real Estate Development Co., Ltd. (hereinafter referred to as Bishuiyuan Company). According to the introduction, the land transfer fees and demolition compensation of the above three development enterprises have all been paid in full at 100%. However, due to some irregularities in the demolition process, the demolition did not proceed smoothly, which not only prevented land construction from being carried out and left the plot de facto idle, but also tied up a large amount of the developers' funds. As time passed, the town government, developers, and villagers waiting for demolition and relocation so they could move into new buildings, all parties involved became increasingly anxious and impatient.
In fact, as for idle land caused by local governments and relevant functional departments, the plot belonging to Yushuntong and the other two companies is by no means an isolated case. According to reports, on the north side of Xili Middle School in Nanshan District, Shenzhen, there is a plot numbered T402-0014, with a land area of more than 10,000 sq m. Because the court did not clearly ascertain the ownership of the plot, it wrongly determined 100% of the rights and interests in the plot as belonging to Zhenbao Company and auctioned it, without considering that Xuena Company held 55% of the rights and interests in the plot, so that neither the transferee nor the competitive bidder could develop the plot, and the plot has therefore remained idle for more than 20 years to this day. The plot once appeared on the national blacklist of idle land in the Ministry of Land and Resources' 2010 verification circular. The plot has been called by Shenzhen real estate insiders "a scar" in the downtown area.
According to Ministry of Land and Resources regulations, for land left idle due to the enterprise's own reasons for more than two years, the land use right must be recovered without compensation, but parcel T402-0014 has been idle for more than 20 years due to court reasons, and can neither be developed nor recovered. Moreover, as Shenzhen housing prices have risen all the way, land prices have also soared accordingly, and the development enterprise owning parcel T402-0014 has been jokingly called by local market participants as engaging in "legal land hoarding".
Idle land puts enterprises in a bind
Regarding the above idle land problems in Beijing and Shenzhen, Zheng Xin believes that these are two fairly typical examples, among which the case in Shunyi District, Beijing, further shows that if the problem of idle land is not reasonably resolved, it will bring negative effects to all parties.
According to Huang Jianong, deputy general manager of Yushuntong Company, in 2011 Yushuntong Company legally obtained through a court auction a plot of land located in Xibaixinzhuang, Shayu Town, for commercial development, and on September 8 of that year signed the Xibaixinzhuang Village Demolition Project Entrustment Agreement (hereinafter referred to as the entrustment agreement) with the People's Government of Houshayu Town, Shunyi, Beijing (hereinafter referred to as the town government). Both parties agreed that Yushuntong Company would entrust the town government to organize and implement the demolition work in Xibaixinzhuang Village. Now, more than two years after demolition started, dozens of residential households still have not been demolished, and the demolition work is at a standstill, making subsequent construction impossible. The plot is de facto idle and has tied up more than 2 billion yuan of the company's funds.
"From December 27, 2011 to now, we have negotiated with the town government more than a hundred times to complete the demolition work as soon as possible, but it still has not been completed, causing the company to suffer huge economic losses. For this reason, Yushuntong Company brought the town government to court on June 23, 2014, requesting the court to order the defendant to continue performing the entrustment agreement and to pay the plaintiff more than 150 million yuan." Huang Jianong said, "We are not asking for too much. We just hope that, on a reasonable and lawful premise, the government can perform its corresponding duties, uphold the spirit of contract, and let the matter be resolved as soon as possible."
As for the reason the land has been idle for a long time, Yushuntong Company believes that the town government launched demolition at the time without obtaining a Demolition Permit, which plunged the demolition work into difficulty.
Yushuntong Company stated that according to relevant government regulations, demolition work may only start after obtaining a demolition permit. On November 27, 2011, the Houshayu Town Government entered the village to carry out demolition, but the Shunyi District Construction Committee in fact only issued a collective land demolition permit for the demolition portion of Bishuiyuan Company, and did not issue demolition permits to Yushuntong Company or Mengke Real Estate. Because no demolition permit was obtained, the legality of the demolition was called into question, making the demolition work extremely difficult. Afterwards, Yushuntong Company and Mengke Real Estate wrote letters to competent government departments such as the Shunyi District and Beijing Municipal Construction Committees to communicate and negotiate on the demolition permit issue. Finally, it was not until December 1, 2013 that the relevant departments issued demolition permits to Yushuntong Company and Mengke Real Estate.