More action urged on housing aid abuses

The mainland needs to intensify a crackdown on abuses in its massive affordable housing schemes, industry observers say, even as it steps up efforts to build more homes for the poor in order to maintain social stability.

President Xi Jinping last week endorsed a plan by the former government to build 36 million affordable homes between 2011 and 2015 under a variety of schemes to accommodate families priced out of the real estate market by soaring prices.

The mainland finished building 4.1 million units in the first three quarters of this year, after building 5.9 million last year and 4.3 million in 2011.

While some observers are sceptical about the figures, mainlanders are more concerned about the misallocation of such homes, fearing taxpayers' money is helping to make rich families even richer in some cases and widening the wealth gap.

"The main issue is the low penalties for illegal conduct," said Wang Xiaopeng, a senior official at the China Real Estate Association, a government think tank. "The authorities must step up law establishment and enforcement."

A report by the National Audit Office showed that 108,400 unqualified families were granted affordable apartments or cash subsidies last year, and that 5.8 billion yuan (HK$7.3 billion) of funds designated for affordable housing funds were misused.

Media reports in the past few years have highlighted a number of people who owned good cars but were still allocated affordable homes, and others who rented out their units instead of living in them, as they are obliged to do.

Analysts said it was crucial to get the distribution right in affordable housing programmes that mobilised trillions of yuan in funds and enormous resources.

Although many cities are deep in debt, the mainland managed to invest 820 billion yuan in affordable housing schemes in the first three quarters of this year.

The authorities hope that increasing the supply of cheap homes will bring down housing inflation and stem complaints about soaring home prices.

They plan to supply 415 million square metres of land for the construction of affordable homes this year - 27.5 per cent of the total land supply for residential property use.

"We must ensure fair distribution and [the programmes] must benefit people who really need to be subsidised," Xi told top officials last week during a study of the affordable housing schemes.

"We must hold those illegal occupants accountable in line with laws and regulations."

Premier Li Keqiang, who built his political reputation pioneering the renovation of overcrowded and dilapidated shelters for mine workers, has also repeatedly described fair distribution as the "lifeline" of affordable housing schemes.

However, the mainland still lacks a national law governing its affordable housing schemes. The harshest punishment is a fine of 5,000 yuan and the barring of disqualified occupants from future applications.

There is also no firm timetable for the introduction of such a law.

"We shall watch what they (the authorities) do, not what they say," Wang said, adding he was optimistic the situation would improve in the next few years.