Trial use of 'idle' fund to build budget homes

By Cao Qian  |   2008-12-23  |     NEWSPAPER EDITION

LOCAL governments might be able to use their "idle" public housing fund to build budget homes in the future, the State Council said in a statement on its Website, the latest move by the central government to solve housing problems for the country's low-income families.

"It should be carried on a trial basis initially in some parts of the country and is aimed to make better use of the public housing fund," the statement on Sunday said. "The Ministry of Housing and Urban-Rural Development should work closely with related government departments to draft trial plans."

Cong Cheng, an official with the Shanghai Provident Management Center, the local watchdog for its public housing fund, said the move "is definitely an important effort made by the central government as the public housing fund can now only be taken out for home purchases. I expect detailed guidelines to be worked out soon by the ministry and when implemented locally, it could be of great help to the city's budget housing program."

The local government said earlier a total of 4 million square meters of budget homes will start construction in the city by the end of this year. Between this year and 2012, about 20 million square meters of budget homes are expected to be completed.

More than 200 billion yuan (US$29.2 billion) are sitting "idle" in the public housing funds nationwide, Vice Housing Minister Qi Ji said in March, according to a Bloomberg News report. In Shanghai alone, that figure could exceed 20 billion yuan, industry observers predicted.

People covered by the country's public housing fund program pay a certain amount of their monthly salary into the fund and their employers are also required to contribute the same amount. The money collected in the fund can be used to buy a home.

Local governments will be given more power in the future to draft their own policies and moves to support the healthy development of their property markets.