Shanghai's first contract for "acquiring residents' old housing for affordable housing"

This article is reproduced from: People’s Daily

Our reporter Huang Xiaohui, Shanghai, April 1—On March 31, Mr. Shi, a resident of Jing’an District in Shanghai, signed two contracts. One was to “sell” his 40-square-meter old house to the Jing’an District Affordable Housing Company, and the other was to purchase a 112-square-meter newly built commodity apartment from a certain real estate developer in Jing’an District. One sale and one purchase, Mr. Shi completed a housing “upgrade.” The signing of this agreement marked a breakthrough for Shanghai in the areas of market-oriented revitalization of existing housing stock and efficient financing and provision of affordable rental housing, becoming the first citywide case in which the government provides guidance and state-owned enterprises implement the collection and storage of residents’ old homes to be used as affordable housing.

After signing with the Jing’an District Affordable Housing Company, Mr. Shi will receive a “property voucher” based on the appraised value of his old home—2.2 million yuan. This “property voucher” is earmarked exclusively to offset the purchase price of the new home Mr. Shi selects for purchase, and the purchased property is expected to be delivered after about two years.

According to the introduction, the supply of affordable rental housing in Jing’an District is mainly based on new construction and conversions. As the central urban area of Shanghai, Jing’an District faces tight land resources, and the traditional model can no longer fully meet the incremental demand for supplying affordable rental housing. In the period of the “14th Five-Year Plan and the 5 more years” (”15th Five-Year Plan, 5 more years” / the next phase), Jing’an District plans to add about 13,000 units (rooms) of affordable rental housing. To further broaden channels for sourcing housing, Jing’an District, as a pilot in Shanghai, has developed the “housing acquisition and swap” model.

Under the model design, the Jing’an District Affordable Housing Company, as the implementing entity, follows market-oriented principles to acquire existing stock housing within the district that has clear property rights and an appropriate total price for small, self-contained units. After being uniformly standardized for renovation, the housing is incorporated into the district-level affordable rental housing management system, providing targeted housing support for groups such as new residents and young people at standards lower than market rental rates in the same area. At the same time, this model opens up a new channel for residents who have housing improvement needs: residents can first lock in their intended housing options among newly built commodity apartments within Jing’an District and the purchase conditions, and then submit an application to the Jing’an District Affordable Housing Company for the acquisition of their old home. The Jing’an District Affordable Housing Company provides residents with a “property voucher” to be used specifically for the swap, realizing a closed loop of “standardized disposal of old homes and smooth purchase of new homes.”

“This policy addresses our needs to improve our living conditions. The process is transparent and the operations are convenient—it also makes people feel more at ease, both worry-free and peace of mind,” Mr. Shi said.