The General Administration of Financial Supervision issued real estate-related financing management measures to reform and improve the real estate financing system

The Zhitong Finance App learned that on August 28, the General Administration of Financial Supervision issued five financing management measures for the real estate sector, including the “Administrative Measures on Commercial Housing Development Loans (Trial)”, to systematically restructure the real estate finance system in five areas: development loans, personal mortgages, commercial real estate loans, urban renewal loans, and trust businesses.

Commercial housing development loans adopt the host bank model, rationally distinguishes between the risk of a housing enterprise group and the risk of a single project, and provides loans to real estate enterprises with different forms of ownership equally. Projects are accounted for separately, and funds are operated independently and managed in a closed manner. The maximum loan period for pre-sale projects is not more than 5 years, and the maximum loan period for current sales projects is no more than 7 years. Increase support for existing home sales and “good house” projects. Loan projects issued in accordance with these Measures are included in the “white list” management.

Personal housing loans adjusted the issuance point of pre-sale commercial housing loans from the capping of the main structure to completion and filing, appropriately optimizing the upper limit of the income repayment ratio, extending the upper limit of the loan period, and introducing convenient arrangements such as “secured transfer”. Commercial real estate loans are divided into three stages: development, purchase, and operation. Special types of urban renewal loans have been established. The trust business insists on being project-centered and strengthens the closed management of funds.

The original text is as follows:

Commercial Housing Development Loan Management Measures (Trial)

Chapter I General Provisions

Article 1 These Measures are formulated in accordance with laws, regulations and regulations such as the “Banking Supervision and Administration Law of the People's Republic of China” and “Commercial Banking Law of the People's Republic of China” in order to regulate the operation of commercial housing development loan business operations of banking financial institutions, strengthen the prudent operation and management of commercial housing development loans, meet the reasonable financing needs of commercial housing development projects, and support the establishment of a new model for real estate development.

Article 2 A lender referred to in these Measures refers to a financial institution established by law within the People's Republic of China to absorb public deposits, such as commercial banks, rural cooperative banks, rural credit cooperatives, etc.

Article 3 Commercial housing development loans referred to in these Measures refer to loans issued by a lender to a real estate project development company (hereinafter referred to as the borrower) for the development and construction of commercial housing and supporting facilities thereof.

Article 4. To carry out commercial housing development loan business, lenders shall adopt the host bank model, reasonably distinguish between the risks of a housing enterprise group and the risk of a single project, make independent decisions in accordance with the principles of marketization and legalization, and provide loans equally to projects of real estate enterprises with different forms of ownership.

Chapter II Project and Borrower Conditions

Article 5. Lenders shall carefully evaluate the status of commercial housing development projects. The project shall meet at least the following conditions:

(1) Obtain legal, complete, true and valid project establishment or filing documents, and obtain land real estate property rights certificates, construction land planning permits, construction project planning permits, and construction permits. Local regulations on the “four certificates” are subject to their regulations, but they must have the same effect as the “four certificates” in full. If matters involving environmental impact assessment, cultural relics exploration, etc., the requirements of the corresponding regulations shall be met.

(2) Comply with the relevant national regulations on the capital fund system for fixed asset investment projects, and the actual payment of project capital is in place.

(3) There is an actual financing requirement, and the borrower has formulated a loan usage plan and a project construction delivery plan.

(4) Can provide collateral that matches the loan amount.

(5) Projects are separately accounted for, and funds are operated independently and managed in a closed manner. Funding between projects must not be mixed up.

Article 6. The lender shall carefully evaluate the borrower's situation. Borrowers should meet at least the following conditions:

(1) Qualified for real estate development.

(2) Good ability to repay debts.

(3) It is not in a state of bankruptcy and restructuring, large-scale seizure and freezing, and there are no major problems such as illegal acts or evasion of financial debts.

(4) The registered capital of the enterprise has been paid.

Chapter III Host Bank

Article 7 Where a borrower applies for a commercial housing development loan, the borrower shall negotiate with the lender, determine a host bank and agree in the contract. The host bank shall issue the commercial housing development loan separately or as the lead bank using a syndicated model. Each project can identify only one host bank, which can be a legal entity or branch office.

Article 8. The borrower shall open a fund account with the host bank. During the life of the project, all funds related to the project, such as commercial housing development loans, project own funds, and existing housing sales funds, other funds related to the project are included in fund account management, with the exception of pre-sale funds, deposit funds, etc., which are supervised in accordance with the requirements of regulations. In principle, the host bank and funding account cannot be changed until the commercial housing development loan is settled.

Project pre-sale fund supervision accounts and deposit accounts shall be opened with the host bank in accordance with regulations.

Article 9. The host bank and syndicate members shall do due diligence, project review, post-loan inspection, etc., and provide financing services for the project on the premise that risks are well managed. The host bank should take the lead in account management, strengthen the monitoring of loan funds, strictly review the use and flow of credit funds, and take timely measures if it finds any abnormalities in loan funds. Syndicate members should actively support the host bank in carrying out these duties, share information in a timely manner, and work together to close and manage project funds.

Article 10 Commercial housing development loans issued by lenders may only be used for commercial housing development projects in the city. Cities referred to in this section refer to cities at or above prefectural level.

Chapter IV Business Handling

Article 11. The borrower submits a development loan application to the lender, and the lender accepts and carries out pre-loan investigations in accordance with the procedures.

Article 12. In accordance with the principles of separation and hierarchical approval of loans, lenders shall clarify the authority to approve commercial housing development loans and standardize the loan review and approval process.

Article 13 The lender shall agree with the borrower in the contract on the specific loan amount, term, interest rate, purpose, guarantee method, borrower's commitment, repayment plan, risk management, and other relevant details. Among them:

(1) Loan amount. The lender shall comprehensively consider the total investment amount of the project, capital investment, own capital, other financing, etc., and refer to the construction cost level of similar local projects to reasonably determine the loan amount to meet the project financing requirements.

(2) Loan term. The lender shall comprehensively evaluate the construction cycle, sales cycle and risk level of commercial housing projects to reasonably determine the loan period. In principle, the loan period for pre-sale projects is no more than 3 years, and the maximum period is no more than 5 years; in principle, the loan period for current sales projects is no more than 5 years, and the maximum period is no more than 7 years.

(3) Loan interest rates. Commercial housing development loan interest rates should follow the principles of interest rate marketization and commercial sustainability, and lenders should reasonably determine loan interest rates on the premise of complying with relevant national regulations and industry self-regulatory management requirements.

(4) The purpose of the loan. Loans are used to develop, build commercial housing projects for sale to the market, rent, etc. Strengthen development loan support for existing housing sales projects and safe, comfortable, green, and intelligent “good house” projects. Loans must not be used across projects, and must not be used to pay land concessions and related taxes, project dividends, other investments, etc.

(5) Guarantee method. The lender shall strictly implement the mortgage guarantee measures for commercial housing development loans, use the land use rights and projects under construction of this project as collateral, and register the mortgage real estate in accordance with the law and regulations in accordance with relevant regulations. When setting up a mortgage, it is necessary to ensure that the ownership of the collateral is clear. Houses and land that have been pre-registered or signed online after investigation shall not be used as collateral. Shareholder guarantees, equity pledges, or other credit enhancement measures may be added as needed.

(6) The borrower's commitment. The lender shall require the borrower to commit to important details relating to the loan in the contract, including but not limited to: the borrower shall use the funds in strict accordance with the contract agreement, shall not withdraw project loan funds in disguise, shall not transfer project loan funds or project revenue funds to the housing enterprise group, parent company or other related enterprises in violation of regulations, the borrower and its shareholders shall not withdraw the project capital, and shall not include the sold house and land in the scope of the mortgage when setting up the mortgage.

Article 14 The lender shall agree on withdrawal conditions with the borrower in the contract, including but not limited to the fact that the full amount of capital has been paid, the construction progress of the project has met the requirements, and the collateral has been registered.

Article 15 The lender shall issue a loan by means of fiduciary payment in strict accordance with the agreed withdrawal conditions, and the progress of the loan shall match the progress of the actual construction of the project.

Article 16 The lender shall agree on a repayment arrangement with the borrower in the contract. In principle, the loan principal amount shall be repaid early after the commercial housing project has been completed and filed, after agreement has been reached. Borrowers should ensure that the first source of repayment is sufficient, and sales repayments should be used as a priority to repay the project development loan.

Chapter V Risk Management

Article 17 Lenders shall, in accordance with these Measures, formulate and improve commercial housing development loan management systems, clarify loan approval standards, operating procedures, risk control, post-loan management, etc., strictly implement unified credit requirements, implement full-process management, strengthen pre-loan investigations, in-loan reviews, and post-loan inspections to ensure the safety of credit funds.

Article 18. Lenders shall strengthen risk monitoring, regularly inspect and analyze details such as the borrower's performance and credit status, major changes in the equity structure, construction and operation of projects, and changes in loan guarantees, and promptly identify risks and take countermeasures. At the same time, take into account the significant negative impact on borrowers caused by companies related to the borrower, etc., and do a good job of risk prevention.

Article 19. Lenders shall carry out risk classification in strict accordance with regulatory requirements, and adjust classification results in a timely and dynamic manner according to the borrower's ability to perform contracts and changes in loan risk.

For loans not repaid as agreed in the loan contract, the lender shall promptly take measures such as settlement, agreement restructuring, transfer or cancellation of claims to resolve loan risks in an orderly manner.

Article 20 The lender shall establish a risk warning and assessment system for the real estate industry. Pay close attention to changes in the real estate market and regularly conduct stress tests on commercial housing development loans.

Article 21. Lenders shall strengthen the management of third party agencies such as asset evaluation for commercial housing development and loan business cooperation, clarify the qualification conditions of cooperating institutions, and establish and improve entry and evaluation mechanisms.

Article 22. The lender shall conduct an internal audit of the commercial housing development loan business of internal functional departments and branches every year.

Article 23. Lenders shall implement the responsibility for managing commercial housing development loans to specific departments and positions, and establish assessment and accountability mechanisms for each position.

Chapter VI: Supervision and Management

Article 24 The State Administration of Financial Supervision and Administration and its dispatched agencies shall supervise and manage commercial housing development loan business in accordance with law, and may put forward relevant prudential supervision requirements on lenders based on the lender's operation and management situation, risk level, and commercial housing development loan business development.

Article 25 Where a lender violates the provisions of these Measures and carries out commercial housing development loan business, the State Financial Supervision and Administration and its dispatching agencies shall order them to make corrections within a limited period of time, and may take supervisory measures or implement administrative penalties against relevant agencies or personnel in accordance with law.

Chapter 7 Supplementary Provisions

Article 26 Commercial housing development projects for which loans are issued in accordance with these Measures are included in “white list” project management, and relevant information is promptly submitted to the urban real estate financing coordination mechanism.

Article 27 Where the financial administration department makes other provisions on development loans for rental housing, affordable housing, etc., it shall apply its regulations. After the implementation of these Measures, if other regulations on commercial housing development loans are inconsistent with these Measures, these Measures shall prevail. The remaining outstanding matters shall be implemented in accordance with the relevant regulations on fixed asset loans.

Article 28 These Measures shall be interpreted by the State Financial Supervision and Administration.

Article 29: These Measures take effect from the date of publication. Projects newly signed with loan contracts after the implementation of these Measures shall be implemented in accordance with these Measures. Projects that have signed a loan contract before the implementation of these Measures will still be executed as agreed in the contract.

Heads of relevant departments and bureaus of the State Financial Supervision and Administration

Answer to reporters' questions on the General Administration's issuance of real estate-related financing management measures

The General Administration of Financial Regulation recently issued the “Administrative Measures on Commercial Housing Development Loans (Trial)”, “Administrative Measures on Personal Housing Loans (Trial)”, “Administrative Measures on Commercial Real Estate Loans (Trial)”, “Administrative Measures on Urban Renewal Project Loans (Trial)”, and “Administrative Measures on Trust Companies Carrying Out Trust Business in the Real Estate Sector (Trial)”. The heads of relevant departments and bureaus answered questions from reporters on related issues.

1. Background of the publication of the “Administrative Measures on Commercial Housing Development Loans (Trial)”, “Administrative Measures on Personal Housing Loans (Trial)”, “Administrative Measures on Commercial Real Estate Loans (Trial)”, “Administrative Measures on Urban Renewal Project Loans (Trial)”, and “Administrative Measures for Trust Companies Carrying Out Trust Business in the Real Estate Sector (Trial)”?

The General Administration of Financial Supervision resolutely implements the decisions and arrangements of the Party Central Committee and the State Council. On the basis of comprehensively sorting out the existing policies in the field of real estate finance, based on the real estate market situation and future development direction, it is linked in an orderly manner with relevant systems issued by the Ministry of Housing, Urban-Rural Development and the People's Bank of China, clarifying management requirements for commercial housing development loans, personal housing loans, commercial real estate loans, urban renewal project loans, real estate trust business, etc., to form a financing system adapted to the new model of real estate development to protect the legitimate rights and interests of buyers, meet reasonable real estate financing needs, and promote the high quality of real estate development.

2. How can the “Administrative Measures on Commercial Housing Development Loans (Trial)” meet the reasonable financing needs of commercial housing development projects?

The measures guide banking financial institutions to adopt a project-centered host bank model in accordance with the principles of marketization and rule of law to meet the reasonable financing needs of commercial housing development projects. The method requires banking financial institutions to reasonably distinguish between housing enterprise group risks and project risks. Loan approval focuses more on the project itself, separate project accounts, and independent operation and closed management of funds to effectively prevent project delivery risks and credit risks. In order to match the construction and sales cycle of pre-sale and present-sale projects in the sales system, the method sets differentiated loan term requirements and moderately lengthens the loan period for present-sale projects. The method is linked to the “white list” mechanism. Loans issued according to the method, corresponding commercial housing development projects are included in the “white list” project management, so that the “white list” policy can benefit more commercial housing development projects.

3. How can the “Administrative Measures on Personal Housing Loans (Trial)” better support rigid and improved housing needs?

In order to cooperate with promoting the reform of the commercial housing sales system, help establish a new model for real estate development, and better meet the needs of personal housing loans under the existing housing sales and pre-sale models, the General Administration of Financial Supervision and the People's Bank of China formulated the “Administrative Measures on Personal Housing Loans (Trial)”. The approach is consistent with the “Opinions on Reforming and Improving Real Estate Credit Management and Promoting the Accelerated Construction of a New Model for Real Estate Development” jointly issued by the People's Bank of China and the General Administration of Financial Supervision, to guide banking financial institutions to support rigid and improved housing needs in accordance with the principles of market-based legalization, and to better protect the legitimate rights and interests of buyers. From a safety perspective, the method adjusts the issuance point of personal housing loans for pre-sale commercial housing from capping the main structure to completion and filing, and requires strengthening risk management throughout the loan process, which is conducive to fundamentally protecting the legitimate rights and interests of buyers. In terms of availability, the method appropriately optimizes the upper limit of income and debt repayment ratio requirements, extends the upper limit of the loan period, helps to reasonably enhance the buyer's ability to borrow, and provides more loan solutions for buyers to choose from. From an economic point of view, the method makes convenient arrangements such as “secured transfers” for second-hand housing transactions, which helps reduce housing transaction costs and better meet the demand for improved housing; at the same time, banking financial institutions are required to strengthen the management of third party cooperative agencies to prevent illegal loan intermediaries from infringing on the legitimate rights and interests of buyers.

4. What are the main contents of the “Administrative Measures on Commercial Real Estate Loans (Trial)”? How to adapt to the credit needs of the commercial real estate market under the new model of real estate development?

In order to promote the standardized development of commercial real estate loans and support the steady and orderly operation of the commercial real estate market, the General Administration of Financial Supervision has formulated the “Administrative Measures on Commercial Real Estate Loans (Trial)”. The method clarifies the scope of the definition of commercial real estate loans, introduces a host banking system, project system, and closed management system, and requires banks to establish and improve commercial real estate loan management mechanisms to effectively identify, evaluate, monitor, control and mitigate risks, and carry out business in accordance with the law. Considering differences in capital requirements and repayment sources during the commercial real estate development, purchase, and operation stages, the method divides commercial real estate loans into three stages of development, purchase, and operation. In response to the characteristics of each stage of financing, the method puts forward detailed requirements in terms of loan use, loan term, customer and project access, loan management, etc., to better meet the credit needs of commercial real estate market development. In order to better connect the system, the use of operating property loans can be carried out in accordance with the provisions of documents such as the “Notice on Accomplishing the Management of Operational Property Loans”.

5. What financial measures are proposed in the “Administrative Measures on Urban Renewal Project Loans (Trial)” to support urban renewal?

In order to thoroughly implement the decisions and arrangements of the Party Central Committee and the State Council to promote urban renewal with high quality, the General Administration of Financial Supervision, together with the Ministry of Housing, Urban-Rural Development, formulated the “Administrative Measures on Urban Renewal Project Loans (Trial)”. The method clarifies the basic principles for financial institutions to carry out loan business for urban renewal projects, and refines requirements such as entry conditions, loan use, repayment sources, and fund management. The method guides financial institutions to establish special types of “urban renewal project loans”, reasonably determine loan amounts, terms, interest rates and guarantee measures, and enhance the accuracy, adaptability and effectiveness of financial service urban renewal. At the same time, financial institutions are encouraged to give full play to their advantages, design comprehensive financial service plans according to the characteristics of urban renewal projects on the premise of managing risks, and increase financial support for urban renewal projects.

6. What are the main purposes and main contents of the “Administrative Measures for Trust Companies Carrying Out Trust Business in the Real Estate Sector (Trial)”?

The approach adheres to principles such as serving the real economy, controllable risk, and implementing appropriate investor management, and requires trust companies to follow the principles of marketization and legalization, give full play to their unique advantages, strengthen professional capacity building, enhance the adaptability, compliance and sustainability of trust services, treat real estate enterprise projects with different ownership systems equally, and promote the formation of diversified financial service channels adapted to the new model of real estate development. The method is conducive to improving the accuracy and adaptability of trust service real estate project docking. Focus on guiding trust companies to adhere to the project-centered approach, innovatively use the host bank model, further improve the closed management of funds, and effectively strengthen the protection of investors' legitimate rights and interests. The approach is conducive to promoting trust companies to address the regular characteristics of the real estate industry, improving management mechanisms, carrying out fiduciary duties, and improving service levels. Clarify the definition, classification and exhibition principles of trust companies' businesses related to the real estate sector, and put forward detailed requirements for asset management trusts to strengthen independent due diligence, centralized decision-making, project management, etc., and put forward specific requirements for investing in non-standardized assets. Detailed requirements are put forward for asset service trusts in terms of the legality of the purpose of the trust, the authenticity of the property, and the clarity of rights and obligations.

This article was selected from the official website of the “General Administration of Financial Supervision”. Zhitong Finance Editor: Chen Siyu.