Seven of the 13 new regulations in Foshan's new policy are related to corporate funds.

On May 13, the Foshan Municipal Housing and Urban-Rural Development Bureau and eight other departments jointly issued the "Notice on Several Measures to Continuously Promote the Steady and Healthy Development of the Real Estate Market" (hereinafter referred to as the "Notice"), which covers optimizing land supply management, moderately optimizing the construction requirements for residential land, and allowing house buyers to settle in.

Unlike many cities that focus their policies on stimulating the enthusiasm of homebuyers, seven of the 13 new regulations in Foshan's new policy are related to corporate funds, covering conditions for land transfer, land payment, default liability for commencement and completion, project financing, and corporate tax payment.

From the perspective of homebuyers, Foshan's new policy involves allowing house buyers to settle in and mortgage interest rates.

Chen Xueqiang, the research director of the South China branch of the China Index Academy, pointed out that the policies mentioned in Foshan's new policy, such as encouraging and supporting the "trade-in" of housing, increasing support for housing provident fund loans, and implementing a dynamic adjustment mechanism for first-home mortgage interest rates, will further accelerate the release of housing demand in Foshan and speed up the sales and destocking of existing and new housing.

Multi-dimensional reduction of homebuyers' repayment pressure

Foshan's latest policy adjustments have lowered the "threshold" for homebuyers in multiple dimensions, including reducing loan interest rates, increasing the amount of provident fund loans, and relaxing the conditions for homebuyers to settle in.

The "Notice" mentions increasing the calculation multiple of the balance of provident fund contributions to overall improve the loanable amount of housing provident fund loans. It promotes the "transfer of ownership with mortgage" for second-hand housing provident fund loans. Employees who purchase newly built commercial housing in Foshan through personal housing commercial loans or personal housing provident fund loans can apply to withdraw their provident fund to pay the down payment for purchasing a home.

Regarding commercial personal housing loans, a phased policy of canceling the lower limit of interest rates for commercial personal housing loans for first-home purchases in Foshan is implemented. The specific interest rate level will be determined through independent negotiations between commercial banks and borrowers.

At the same time, homebuyers can settle in immediately. Non-Foshan residents who own legally owned residential properties in Foshan can apply for household registration at the location of their property, and their spouses and minor children who live together can also migrate.

"The threshold for entry into the Guangzhou periphery has been significantly reduced, and a college degree is sufficient for entry. Under the circumstances that Guangzhou has basically withdrawn from the housing purchase restriction policy, Foshan can only attract population through home purchases and low housing prices," commented Li Yujia, the chief researcher of the Housing Policy Research Center of the Guangdong Urban Planning Institute. The competitiveness of a city mainly lies in employment, educational resources, the stability and prospects of housing prices, and the completeness of housing and community living facilities. In addition to attracting demand and encouraging home purchases, Foshan also needs to improve the quality of public facilities.

In addition, there have also been adjustments to the prices of water, electricity, and gas for commercial apartments used for family residences. For commercial apartments and similar residences in Foshan that are used for residential purposes, the prices of water, electricity, and gas will be executed at the residential rates.

Reducing the burden on enterprises at multiple levels

In addition to the homebuyer side, the "Notice" contains seven new policies to reduce the burden on enterprises.

The "Notice" stipulates adhering to net land transfers, high-quality land transfers, and pure land transfers; apart from green spaces, roads, etc., newly transferred residential land may no longer set other construction requirements; local governments should prioritize the construction of supporting public service facilities such as schools and hospitals in relatively concentrated areas of land to be transferred according to planning requirements, and vigorously increase high-quality compulsory education and medical resources.

Li Yujia pointed out that the above new rules consider the digestion pressure of supplied housing in the area when supplying land on the one hand, and supply "good plots," i.e., net land transfers, on the other. At the same time, no other construction requirements are set to reduce the pressure on developers.

Regarding plots that exceed the agreed commencement and completion dates after land transfer, the "Notice" stipulates that the standard for liquidated damages for new real estate development projects will be reduced from 0.03% per day to 0.005% per day, and the same applies to already transferred projects.

"Due to the market downturn exceeding expectations, developers are facing tight capital chains, and some plots have shortcomings in land leveling and supporting facilities, making it difficult to fulfill the agreed commencement and completion dates. Collecting liquidated damages further exacerbates the pressure on developers," Li Yujia believes.

Regarding land payment, the "Notice" stipulates that real estate development projects that pay land transfer fees in installments can apply for development construction procedures such as construction land planning permits, construction project planning permits, and construction project construction permits after the assignee signs the "Contract for the Assignment of the Right to Use State-owned Construction Land" and pays 50% of the transfer price. After paying the remaining 50% of the transfer price, the land use right certificate and the commercial housing presale permit will be processed.

Li Yujia believes that implementing staged payment of land transfer fees is aimed at boosting developers' enthusiasm for acquiring land, which is beneficial to the competitiveness of newly approved plots, but it puts a certain pressure on existing undeveloped plots.

At the same time, the "Notice" clearly states that it will expand the coverage of guarantees, allowing "payable on demand" bank guarantees as land bidding deposits, allowing enterprises to issue commitment letters for land purchases using their own funds instead of land purchase fund review reports, and allowing enterprises to replace commercial housing presale regulatory funds with cash guarantees of equal amounts; increase financing arrangements and support for projects on the "white list" of the city's real estate financing coordination mechanism.

"Comprehensively relieving developers' financial difficulties to ensure project completion and delivery, reducing market expectations of delivery difficulties," Li Yujia pointed out that the key lies in whether banks are willing to provide guarantees; the latter key lies in injecting incremental funds to release regulatory funds, repaying bank financing, and allowing funds to circulate, but whether subsequent loan repayments, especially ensuring house delivery, depend on whether project sales can normalize."