Officials discuss housing funds

• Source: Global Times
• [10:40 July 07 2010]
• Comments

A console at the Shanghai Provident Fund Management Center. Photo: IC

By Zhou Mi

Officials from the Ministry of Housing and local officials and academics have concluded that Shanghai faces many obstacles in implementing a plan to use its housing fund reserve to supplement the construction of housing for those on a low-income.

Zhang Qiguang, director of the Department of Housing Provident Fund Supervision and Administration under the Ministry of Housing, led a group of officials to Shanghai on June 29 and met with local officials. They discussed the feasibility of allocating capital from the city's housing fund to the building of low-rent and affordable housing.

The housing fund is made up of long-term savings overseen by the government and paid partly by employers and partly by employees, who can access the money to put towards buying a house or towards their retirement.

Chen Jie, a professor at the Real Estate Research Center of Fudan University who attended the meetings, told the Global Times that the discussions focused on how the housing fund could be used to support affordable housing, and the lack of a legal framework governing how this could be achieved.

"The Ministry of Housing wants to reach some consensus on how to use the housing fund, but the arguments involved issues that surpassed the ministry's remit," Chen said. "For example, who should be responsible for overseeing the money, the local government or the national government?"

Chen said that, if individual local governments are given the power to take money from their housing funds and put it towards their affordable housing projects, there is the danger of corruption. However, if the central government is to take charge, it will need time to build a system to allow it to reallocate capital between cities with funding shortfalls and cities with funding surpluses. "A legal framework is an essential prerequisite, however, housing laws are blank in this area," said Chen.

Last October, the Ministry of Housing issued guidance encouraging up to 50 percent of the housing fund capital reserves of local governments to be allo-cated towards building new low-income houses. However, the guidance did not provide detailed instructions on how to realize the policy.