Are small property rights houses protected after collective operating construction land enters the market?
The reform of allowing collective operating construction land to enter the market mainly targets problems left over from history, and does not break through the existing Land Administration Law.
Author | Gui Hua
A few days ago, the Ministry of Finance and the Ministry of Land and Resources jointly issued the Interim Measures for the Administration of the Collection and Use of the Land Value-Added Revenue Adjustment Fund for Rural Collective Operating Construction Land, making clear provisions for regulating the distribution of land value-added revenue in the process of rural collective operating construction land entering the market.From last winter to this spring, a new round of frenzied housing price increases appeared in some first- and second-tier cities across the country, tugging at the nerves of the public. Land system reform involves the interests of countless families, and therefore attracts particular public attention.
In December 2014, the General Office of the CPC Central Committee and the General Office of the State Council jointly issued the Opinions on the Pilot Work of Reforming Rural Land Expropriation, the Entry of Collective Operating Construction Land into the Market, and the Homestead System, deciding to select several counties and cities across the country for pilot land reform. In February 2015, the Standing Committee of the National People's Congress authorized the State Council to launch pilot reform work in 33 pilot counties (cities, districts) including Daxing District of Beijing, covering three aspects: rural land expropriation, the entry of collective operating construction land into the market, and the homestead system. Among the 33 pilot areas, 15 involved reform of collective operating construction land entering the market.
China adopts a management approach based on classified land use. According to the requirements of the Land Administration Law, land includes categories such as agricultural land, construction land and unused land. Different management measures are adopted for land of different uses. The conversion of agricultural land and unused land into construction land is strictly controlled and requires certain approval procedures, with the aim of rationally utilizing land resources. The "three types of land" reform carried out this time all relates to construction land.The conversion from agricultural land and unused land to construction land, especially to urban construction land, usually generates differential land rent higher than agricultural land rent, bringing land value-added revenue. The Interim Measures for the Administration of the Collection and Use of the Land Value-Added Revenue Adjustment Fund for Rural Collective Operating Construction Land are intended to resolve the question of how land value-added revenue should be distributed.
It needs to be made clear thatcollective operating construction land is a concept formed historically. The Land Administration Law revised and implemented in 1998 stipulates that
any unit or individual that needs to use land for construction must apply to use state-owned land in accordance with the law (Article 43); the right to use land owned collectively by farmers may not be granted, transferred or leased for non-agricultural construction (Article 63).
Under the restrictions of these two provisions, rural collective land, apart from being usable for approved homestead house construction, for the construction of public facilities and public welfare undertakings, and for establishing township and village enterprises, cannot be used for other construction activities. In the mid-to-late 1990s, township and village enterprises in rural China generally underwent restructuring toward private ownership, and afterward newly established township and village enterprises rarely appeared. This means that rural collective land basically cannot be used for operating construction and development. Farmers applying for homesteads is mainly "self-use" in nature, satisfying their basic production and living needs, and does not have an operating nature. This is the reason why rural homesteads and the houses on them cannot be sold outside the collective, or, if sold, cannot have property ownership certificates processed.
The key to understanding the Interim Measures for the Administration of the Collection and Use of the Land Value-Added Revenue Adjustment Fund for Rural Collective Operating Construction Land is to grasp the two words "operating".The collective operating construction land that currently exists was basically generated before the 1998 revision of the Land Administration Law, mainly coming from township and village enterprises before restructuring. A small number of places did not strictly enforce the Land Administration Law and continued to generate some collective operating construction land after 1998. For example, in Shanghai, before 2004 the local authorities still approved collectives to carry out factory or commercial construction directly on agricultural land without land expropriation; village collectives only needed to pay part of the fees to the government to complete land conversion and obtain a "red certificate" distinct from state land use rights. The difference between the "red certificate" and the "green certificate" for state-owned land use rights is that the latter can be legally traded and used for bank mortgages, while the former can only be used by oneself. At present, there is a total of more than 30 million mu of collective operating construction land nationwide.
The main purpose of the central government's launch of the reform is to target these more than 30 million mu of collective operating construction land left over from history.Since after the reform of township and village enterprises, land use rights basically passed into private hands, and later some restructured enterprises also failed in transformation, this brought about the question of how to dispose of collective operating construction land. This round of reform is intended to explore ways to revitalize this collective operating construction land and meet the needs of market circulation of construction land resources and industrial upgrading.Because the reform of collective operating construction land targets historically left-over "operating" land, it does not involve self-use land such as rural homesteads, still less non-construction land such as cultivated land. Therefore, this reform does not change the policy prohibiting the external sale of rural homesteads. That is to say,the construction of "small property rights houses" is still an illegal act, and purchasing "small property rights houses" is not protected by law.
In addition,the reform of allowing collective operating construction land to enter the market mainly targets problems left over from history and the stock of land left before the revision of the Land Administration Law; this reform does not break through the existing Land Administration Law.The central government has always made clear its stance that contradictions left over from the past should be resolved through reform, rather than creating more contradictions. That is to say, this reform policy applies only in places where historically left-over collective operating construction land exists. In places where no historically left-over collective operating construction land exists, this reform policy does not apply. The policy of allowing collective operating construction land to enter the market does not break through the current Land Administration Law. To understand this policy, one must understand that the original intention of the central government's reform is to solve historical problems, and local practitioners must not misinterpret it.
Once again,because the reform mainly targets the historically left-over collective operating construction land created by township and village enterprises in the 1980s and 1990s, this reform is mainly meaningful in the eastern coastal areas.The reason is that in the past township and village enterprises were relatively developed in the eastern region, such as southern Jiangsu and Zhejiang, while in the vast central and western regions township and village enterprises were not developed in the past, so there is very little left-over collective operating construction land. Breaking through the existing system through policy reform ultimately concerns only the interests of farmers in a small number of eastern areas, and has nothing to do with most farmers in the central and western regions. A reform that breaks through the Land Administration Law can only allow a minority who have already become rentiers, such as farmers in the Pearl River Delta and Yangtze River Delta regions, to gain without working even more, and has nothing to do with most people.Making land value-added revenue shared by the public rather than by a minority is the goal of the reform.Yet the current mainstream media discourse seems to deliberately misunderstand the policy, with the intention of pushing land system reform away from the direction of benefiting most people.
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