« Ambiguous Rights: Land Reform and the Problem of Minor Property Rights Housing », paper written by Karita Kan (2012). China Perspectives, 2012/3.
Minor property rights housing (xiao chanquan fang 小产权房) is an unofficial term referring to illegal residential structures built on rural, collectively-owned land that is sold or rented to non-local urbanites. Its controversial legal status stems from the dual ownership structure in China’s land regime. According to Article 8 of the Land Administration Law, the state claims ownership of urban land, while land in rural and suburban areas is owned, unless otherwise stipulated, collectively by rural residents represented by peasant collectives. Rural collective land is theoretically reserved for the exclusive use of villagers, and should be not sold, transferred, or leased to non-rural residents. The real estate boom and successive hikes in property prices have nevertheless provided strong incentives for rural landowners to capture the monetary benefits of urban development through selling and leasing land and houses to urbanites looking for affordable accommodation.
The government is about to approve a new pilot plan, aimed at liberalising rural construction land-use rights, by granting farmers the right to transfer and use rural land-use rights as collateral. The follow-up document, nongdi rushi shidian fang’an (农地入市试点方案), aims at developing the policies issued from the Third Plenary Session of the 18th Central Committee of the CCP held in November 2013.
According to the plan, all collective construction land that meets the requirements of the urban plan could be transferred, leased, or mortgaged. The collective economic system will operate a transformation into a shareholding system, through land contributions. The period of tenure will be identical to urban construction land-use rights.
The plan introduces a system, well known in Western legal systems, by which society as a whole have a right to participate in the economic benefits brought by urbanisation. Thus, the government might levy taxes on the increase in land value that accrues when it is transferred. In Spain, this principle is incorporated in Article 47 of the constitution, which declares that “the community shall have a share in the benefits accruing from the town-planning policies of public bodies”, which is a specific reference to the increase in the value of land accrued as a consequence of the modification of its use from rural to urban. It might turn out to be an excellent tool to increase the local government’s revenue, putting an end to the expropriation game, and hopefully improving the lives of millions of farmers.