New buildings under construction in Beijing in December 2018 Photo: VCG

A supplementary policy was announced by China's government agencies on Wednesday to improve regulation of transfers in the residential real estate market. The country's housing market, a key driver of economic growth, is getting more stable as supervision getting more complete, according to analysts.

If a housing unit is transferred for free in order to avoid a transaction tax, then a non-recurring income tax payment will be due from the recipient. This provision doesn't apply if the transfer is among family members, according to a new policy issued by the Ministry of Finance and State Taxation Administration on Wednesday.

The new policy has been interpreted as a positive sign for the housing market, but experts noted that the overall policy stance of encouraging home purchases for the purpose of living rather than speculation has not changed - it's just a regulatory improvement. It will benefit the market, as speculation will be cracked down on.

A veteran industry analyst said that the new supplementary policy will only have a limited influence on the housing market. The policy doesn't change the existing tax rules or the 20 percent rate on transfers of homes, it just changes the classification of the income tax liability in regard to the recipient of the transfer, Yan Yuejin, research director at E-house China R&D Institute, told the Global Times on Wednesday.

"It's a supplement to the income tax rules on property transfers enacted in 2009, only it changes the name of the tax from 'other' to 'non-recurring income tax'," Yan said. "Transfers among family members were also spared then, so the tax rate and rules stay the same."

An income tax rate of 20 percent was put on home property transfers among non-related individuals under the 2009 provision. The measure was intended to be a curb on unregulated house transfers that were structured to avoid transaction taxes or home-purchasing restrictions.

China's housing market remains stable. Latest data from the National Bureau of Statistics showed that the price of new houses in four first-tier cities were up 0.3 percent in May compared with April.
Newspaper headline: Housing market stabilizes as regulation improves