How to improve the Public Rental Housing Program?

As I mentioned in my last post, although there are some concerns regarding funding and land use problems, a public rental housing program still seems like a viable method to address the affordable housing problem in China (Dramatic rise in housing prices during the past decades makes affordable housing out of a large amount of low-income and medium-income people’s reach). So how might we solve these problems and create improvements?

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Public Rental Housing Program

From my perspective, the first method is to break the limits and expend the coverage. In China today, a person applying for public rental housing is required to complete a background check as well as submit proof of income. The problem is different provinces have different requirements. For example, let me assume that you are originally from Beijing, married, having one child, with an annual salary above ¥100000(approximately $15000). Here are the different situations. With this condition, you can’t apply for public rental housing in Beijing due to the requirement of residents and income. But if you consider changing the job to other cities, you will get the qualification after one year in some cities like Guangzhou and Shenzhen. For other cities like Chongqing, you can even submit the application immediately once you find a job there. Based on these different situations, what I am thinking is breaking the cities’ limits and eliminating the different restrictions. In another words, we treat all applicants at the same. Whether they are citizens or not, they share the same requirement for applying public rental housing in a specific city. In this way, we are expending the coverage. So more people in need could benefit from this program.

The second way to make some improvements focuses on getting multiple sectors to contribute to public renting housing program. Right now, governments always plan new zones for public rental housing program. Which means, all the funding is covered by provincial governments and central governments. Obviously, this is not appropriate for the long term financial sustainability of the province. Another approach that might work better is to introduce commercial players into this structure. But why would these commercial real estate companies have interests in non-profit program? Here is my view: the government could have a trade-off with real estate companies, encouraging housing in exchange for a relatively lower price for permits to develop commercial land use. A lower price can be an important incentive to real estate companies. In this approach, both public sectors and private sectors are involved to address the affordable housing program.

These two possible improvements require compromise between governments and private sectors. This is not an easy task, but since governments are paying more attention to public opinions, there is a higher chance of this being a possibility in the future.

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