National Law Review Reports China To Establish a Unified Real Property Registration System

Here’s what they say

Essentially they are trying to centralize in order to get standardized sets of information and it looks as though the registration process will also be used as a way to control official corruption .
The fact that China, one of the world’s most vibrant housing markets, lacks a nationwide property registration scheme may strike some as surprising, but this is now set to change following the publication in August of a draft regulation targeting the establishment of a national property registration scheme within the next three years. The measure will improve on China’s current system, where information is managed by different departments but is not shared internally. It will also help further President Xi Jinping’s on-going anti-corruption campaign by providing central level leaders with a mechanism to certify the property holdings of central and local level officials and ensure that no official has accumulated property holdings beyond his or her means.

The plan to establish a nationwide housing registration scheme was first announced following the Third Plenum of the 18th Central Committee of the CCP in November 2013. On August 15, 2014, the Legislative Affairs Office of the State Council published the Interim Regulation on Real Estate Registration (Draft for Public Comment) (“Consultation Paper”) to solicit public comments. This public comment period ended on September 15, 2014, and it is expected that a final version of the law will be passed by the end of this year.

The envisioned real property registration scheme would apply real property registration broadly to land, housing, forest, grassland, and maritime spaces.  It would be rolled out over the next three years, with an integrated management system for real-time information and queries to be established within four years.

Once established, the nationwide scheme would deliver three primary benefits:

First, it would centralize the authority for collecting, maintaining, and managing real property registration records, thereby alleviating many of the problems currently found in China’s overlapping national and local registration schemes. At present China’s real property registration functions are spread out over multiple agencies, each in charge of properties under its own respective function (e.g., agriculture, fisheries). Under the Consultation Paper, the Real Property Registration Bureau under the Ministry of Land and Resources will be the only government agency in charge of real property registration. China’s present registration scheme also clashes vertically, with national laws permitting owners to register state-owned land at either the county, prefecture, or provincial-level governments. Under the Consultation Paper, local governments would be required to establish branch bureaus to handle local registration matters, but this information would be quickly shared with the national authorities.

Second, a unified registration system would help central and local governments collect crucial data with respect to China’s national property market, including information such as gross sales, ownership patterns, and geographic allocation. A more detailed and accurate understanding of real property ownership will increase transparency nationwide, permitting the government to develop more targeted and efficient policies to regulate the national market. For the “average Zhou,” a national property registration scheme would also help to protect the rights of property owners and prospective purchasers, who would consequently have greater assurance that a given individual is the legitimate owner of a given plot or structure.

Finally, the establishment of a national registration scheme would likely help further President Xi Jinping’s on-going anti-corruption campaign in a number of ways. One example relates to the problem of corrupt government officials purchasing many homes in China, a phenomenon that is increasingly reported through Chinese news media. Perhaps most representative of this problem, and greater public scrutiny thereof, is the case of the so-called “house sister” Gong Aiai, a former banking official in Shaanxi province sentenced to three years in prison after it emerged she had falsified documents to amass dozens of properties in China. Through a national scheme requiring full disclosure of real property ownership, public officials would be strongly discouraged from owning multiple real properties. (Indeed, second-hand flash sales by Chinese officials are rumored to have spiked over the last year, as officials and Party members seek to unload excess homes in anticipation of possible investigations.) Such a registration system would also help uncover those who bought multiple houses with illegal earnings or who abused their power to acquire properties at below-market cost.

At a time of widespread regulatory stagnation in China, the comparatively fast progress on a nationwide property registration scheme suggests a strong degree of support from the central government leadership. And it further indicates the Chinese government’s desire to harness the power of data in its governance of Chinese society.

© 2014 Covington & Burling LLP