Alarm at Beijing plan to punish developers who leave land idle

Property developers have reacted with alarm to reports that Beijing plans to enforce a nationwide crackdown on developers found guilty of leaving sites idle for speculative land banking purposes.

'The government will strictly crack down on any illegal use of land and hoarding of sites meant for development to resell the land for profit,' Yun Xiaosu, deputy minister of Land and Resources, said last week.

'We are asking local governments to conduct site investigations and [look at] reasons for sites being left undeveloped and the survey should be completed by the end of this month.'

The briefing and the blunt comments follow warnings from Beijing in November that it planned to tackle idle development sites. It said developers would be charged a penalty tax of 20 per cent on sites left idle for two years, and in a worse-case scenario undeveloped sites would be confiscated without compensation.

The provincial governments of Guangzhou and Shanghai followed up on these warnings by saying that developers would pay a one-time penalty of 20 per cent of the land cost if construction failed to start within two years of site purchase.

At last week's briefing it was disclosed that 10,000 hectares of land sold for development on the mainland remained undeveloped. The government conceded that changes to urban planning and legal disputes accounted for 55 per cent of the total idle land, but said 45 per cent was due to delays by the developers themselves.