Is it happy or unfinished?
How to Avoid the Risk of Pre-sale System of Commercial Housing
How do owners defend their rights when they encounter unfinished buildings?
"Compared with the priority of the constructor and mortgagee, there is a more priority right, that is, the buyer's basic creditor's priority right to be repaid." Wang Yuchen, director of Beijing Jin Su Law Firm reminded this priority right of repayment. The premise of the exercise is: it must be prosecuted and enter the legal process.
"Otherwise, waiting for the bank, the construction workers, etc. to have the money taken away, and then sue, and then have the priority is no use. If necessary, you can apply for the developer's bankruptcy and exercise the priority in the bankruptcy liquidation."
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In two weeks, the more than 50 households in the Bieyang Xingfucheng Community in Kunming City, Yunnan Province will usher in the New Year.
As promised, this should be the last New Year they spent in the unfinished building that they spent money to buy.
The construction of this building was stopped in 2015 due to the developer's funding break. After receiving high attention this year, it was promised to resume work in August and will be completed and delivered at the end of October 2021.
Such unfinished buildings are not alone.
The reasons for project shutdowns vary, and the victimized owners are always asking the same question: If they bought an existing house instead of a pre-sold house, would they not have what they are today?
Recently, some cities have adjusted their pre-sale policy.
Tightening, such as Chengdu, stipulates that all pre-sale funds for commercial housing will be deposited into the supervision account, and development companies shall not collect the purchase payment in any other form; relaxation such as Tangshan not only increases the nodes for withdrawing key regulatory funds, but also increases the amount that can be withdrawn.
Where will the pre-sale system in our country go, and how should buyers avoid the risk of paying for unfinished buildings?
Is the current pre-sale system of the three red lines still a magic weapon for real estate companies?
The real estate market is uneven, and different cities in my country have different regulations on pre-sale conditions.
A sample survey of some cities in the "Detailed Explanation of the Pre-sale System-Policy Analysis and International Experience Reference" issued by Haitong Securities in October 2018 found that the average values of the pre-sale conditions (proportion of the project's ground floor) in first-tier, second-tier and third-tier cities were respectively They are 81%, 78% and 56%. The lower the tier, the looser the pre-sale conditions.
The survey showed that at that time, the pre-sale conditions in Xuhui District of Shanghai were the most stringent (89%), requiring commercial housing development and construction to have reached the ceiling of the main structure; commercial and office buildings reached the ceiling of the main structure, and high-rise buildings reached the main structure. 2/3, and the construction progress and completion and delivery date have been determined.
The average value of Beijing, Shanghai, Guangzhou and Shenzhen reached 81%.
Tangshan has the lowest average (8%) in this survey.
In 2018, the "Opinions on Accelerating the Processing of Pre-sale Permits for Commercial Housing in Downtown Areas" stipulated that for commercial housing that has invested more than 25% of the total investment, the image of the project should reach plus or minus zero for those with more than six floors; six floors and below If the progress of the project image reaches the top of the ground, you can apply for a commercial housing pre-sale permit.
In December this year, Tangshan's pre-sale funding policy was further loosened.
The Housing and Urban-Rural Development Bureau of Tangshan City issued the "Draft Revision of Tangshan City Commercial Housing Presale Fund Supervision Measures (Draft for Solicitation of Comments)", which increased the 5 nodes for withdrawing key regulatory funds specified in 2015 to at least 8 nodes, and increased the Amount.
The 2015 policy stipulates that when the construction ratio of similar projects is 1/3, only 30% of the funds can be withdrawn.
This time this amount has been increased to no more than 35% of the total amount of supervision.
In August of this year, the Ministry of Housing and Urban-Rural Development and the People's Bank of China held a symposium on key real estate companies in Beijing.
A major signal was released at the meeting: the formation of capital monitoring and financing management rules for key real estate companies.
This is regarded as the boots landing of the "three red lines" in the real estate market before.
Although there is no announcement of specific details, the market generally believes that real estate companies will face three red lines for financing-after excluding accounts receivable, the debt-to-asset ratio should not exceed 70%, the net debt ratio should not exceed 100%, and the cash short-term debt ratio should not be lower. At 1.
Under this rumors, real estate companies accelerated sales collections and eased financial pressure through equity financing.
The real estate financing report monitored by the Tongce Research Institute shows that in November, the total equity financing of 40 typical listed real estate companies was 25.636 billion yuan, accounting for 23.50%, a sharp increase of 331.2% from the previous month.
Therefore, the turmoil about the pre-sale system policy, in this context, can more affect the fragile nerves of real estate companies.
As a pioneer of reform, the Guangdong Real Estate Association issued the "Urgent Notice on Requesting Opinions on the Pre-sale License of Commercial Housing" on September 21, 2018, stating that the existence of the pre-sale system of commercial housing has led to unfinished projects, illegal sales, and transactions. Risks such as unfairness, difficulty in clarifying housing area management functions, unbalanced development and low-efficiency competition, are recommended to reduce the high leverage effect brought about by the pre-sale system, gradually abolish the pre-sale system of commercial housing, and fully implement current sales.
However, from May to October of that year, Zhongshan City, Guangdong Province launched a total of 16 residential land plots that clarified the transfer conditions of existing home sales (that is, required developers to directly sell commercial houses that have been formed for sale with complete certificates), and 3 plots of land Passed auction, 1 case was sold at the reserve price.
"The policy encourages the delivery of existing homes, and in essence it still hopes to compress the high turnover rate of the real estate market. Under pre-sale conditions, developers can borrow the owner's funds as interest-free funds to speed up their own capital turnover." Chen Yuan, a real estate analyst at a well-known brokerage firm (Pseudonym) said that companies think more about the rate of return. If the government can give a certain discount when collecting land transfer fees in the delivery of existing houses, some companies will be willing to try.
Especially in some cities where the contradiction between supply and demand between people and land is very prominent, there will be companies with strong financial strength and hope to maintain brand influence in first-tier cities to strategically trade.
However, in most second- and third-tier cities, the real estate market does not have such a big contradiction between supply and demand. When there are choices, companies will still give priority to off-plan housing delivery.
Chen Yuan calculated an account for the China Youth Daily and China Youth Daily reporter: It will take about two years at the earliest for the company to acquire land and sell it.
Some of the capital cost of real estate enterprise borrowing is more than 10%. Even if the increased management cost is not considered, only the capital use cost required for construction is considered, and the cost is about 21% more.
The aforementioned survey also cited Guangzhou example projects to compare the impact of changes in pre-sale time nodes on the profits of real estate companies.
If the pre-sale system changes from two-thirds of the main body to a structural ceiling, the net profit will fall by 0.47 percentage points, and the internal rate of return will fall by 3.47 percentage points. If it is fully sold (land acquisition to sales for two years), it will drop by 2.44% and 9.44 respectively. %.
"The'high turnover' strategy under pre-sales has alienated real estate development into capital operation to some extent." said Li Yujia, chief researcher and assistant director of the Guangdong Housing Policy Research Center.
Will the pre-sale system be cancelled?
Although the pre-sale policy was originally designed to help developers rationally use leverage to speed up the progress of real estate development projects, improve the efficiency of capital use, reduce financial pressure, and guarantee the timely delivery of projects, in actual operation, home buyers " "Wrong product version" and even encounter unfinished buildings still happen from time to time.
Kunming Distinctive Happy City Community is a "Happy City" promised to be delivered in 2015 when buying a house.
By 2020, water, electricity and gas will still be blocked, and even doors and windows will not be installed.
Some households have spent all their savings and have to pay mortgage loans. They are really unable to purchase other real estate or rent houses, and can only live in unfinished buildings.
Li Yujia believes that the root cause of these problems is not the pre-sale system, but the supervision.
"Essentially,'pre-sale + mortgage' is to adapt to the characteristics of large consumption, high threshold and high cost of commercial housing. By shortening the housing supply cycle, increasing the scale of supply, reducing financial costs, and lowering housing prices, developers and buyers can achieve a win-win situation."
Yan Yuejin, research director of the Think Tank Center of E-House Research Institute, also agrees that such unfinished buildings are actually related to the large investment in the past but poor product marketing, so it is actually a new situation of unfinished buildings, that is, enterprises. Inadequate control of funds has caused various problems in the project.
In Li Yujia's view, my country has stricter regulations on pre-sale system conditions, which are much higher than those in developed countries.
Li Yujia has contacted developers, local governments, and banks through multiple topics.
He bluntly said that the lack of sufficient motivation for banks to supervise is also due to the fact that they believe that with the hot sale of houses, the guarantee of advance collection and land mortgage, development loans are safe.
Banks also care about the loans and intermediate income business contributed by developers after their funds are returned to circulation.
Therefore, in fact, banks have relaxed their supervision of pre-sale funds.
Yan Yuejin suggested that banks should avoid the impulse that sometimes banks both supervise and cooperate with such enterprises, so they tend to be empty.
"The supervision itself is linked to pre-sales. If it is an existing home, the supervision itself is of little significance."
During the new crown pneumonia epidemic, some cities lowered the threshold for the withdrawal of pre-sale funds.
Li Yujia pointed out that some local governments are highly dependent on real estate and are forced to adopt measures such as lowering the pre-sale threshold, but there may be many unfinished problems in the future.
So, will the pre-sale system be phased out?
Li Yujia believes that from the current situation of my country's developers with a single financing model, high land prices under "bidding, auction and listing", high housing prices, and large supply and demand contradictions, the possibility of canceling pre-sales in the short term is relatively small.
"However, based on the improvement of the government's service of decentralization, regulation and service and the reform of administrative examination and approval, the possibility of improving the pre-sale system is relatively high. For example, by raising the threshold of pre-sale, all pre-sales will be capped; Withholding part of the funds to ensure housing quality and public construction; another example is that hot-spot urban areas have launched on-the-spot pilot projects, and the scale of stock houses in key first- and second-tier cities or hot provinces such as Guangdong and Zhejiang will not affect short-term supply and demand. "Li Yujia told a reporter from China Youth Daily and China Youth Daily.
How to supervise the process?
Li Yujia suggested grasping four key points: First, whether the pre-sale approval requirements for the different image progress requirements of the low-level, high-level, and middle-level seniors are strict; second, whether the project capital is actually paid in place and whether it belongs to its own funds; "(That is, whether the procedures for approving planning permission first and then approving pre-sales) are strictly followed; the fourth is whether the pre-sale funds (down payment and mortgage loans) are allocated in strict accordance with the progress of the project.
How to avoid the risk of unfinished buildings
Wang Yuchen, director of Beijing Jinsu Law Firm, said bluntly that it is necessary to recognize a basic reality: owners are often the last to realize and the easiest to lose money.
Wang Yuchen said that this is because when the developer's capital chain breaks, private capital and major banks will immediately take action, sue and seize all the property that can be sealed up.
This includes houses purchased by many owners.
Once the relevant judgment takes effect, these private capital and banks will apply to the court for enforcement as soon as possible, auction the sealed real estate, and deprive all the money of the developer as much as possible.
Before that, developers often transfer property.
"The use of construction units to falsely report project payments and the use of employees to falsely report wages has become a secret."
Wang Yuchen has done many cases of unfinished buildings and has contacted many owners who unfortunately bought unfinished buildings.
He said, "Sometimes there is a feeling of hating iron but not steel."
"Don't make a move when it's time to make a move, wait for the developer or other owners to toss, dream of taking a ride, and wait until the house is empty. Often you miss a good opportunity to recover your losses." He suggested that once you find that your house will be out of order Therefore, we must act immediately to unite all owners who deserve to be united, and use all legal and compliance legal means.
For example, the developer of a project in Jinghai, Tianjin, had a capital break and transferred the prepaid house purchase payment through the construction unit before the break to evade financial supervision.
In the process of safeguarding rights, the relevant departments made partial advances and completed part of the project.
This part of the owners successfully acquired the house.
Some owners have cancelled commercial housing sales contracts and bank mortgage contracts through civil litigation.
Wang Yuchen specifically pointed out that many people may have a misunderstanding: the real estate has been sealed up long ago, the bank, creditors, and constructors have been sealed up countless times earlier. The constructors have the priority of repayment, and the banks and creditors have mortgage rights. I can't get the money back.
"Compared to the priority of the constructor and mortgagee, there is a more priority right, that is, the buyer's basic creditor's priority right to be repaid." Wang Yuchen reminded that the prerequisite for the exercise of this priority right of repayment is: Prosecution requires legal proceedings.
"Otherwise, waiting for the bank, the construction workers, etc. to have the money taken away, and then sue, and then have the priority is no use. If necessary, you can apply for the developer's bankruptcy and exercise the priority in the bankruptcy liquidation."
A warning that may be effective is to avoid small real estate companies as much as possible.
Chen Yuan said that the general consensus in the industry is that in the next stage, the life of small real estate companies may be more difficult.
"The improvement space and strategic pattern of relatively large, top 30 or even top 10 real estate companies are relatively stable. The leading real estate companies in some regions have only a few billion yuan in annual sales, but their cash flow and debt ratio It is relatively safe, and we think the problem is not too big." Chen Yuan said that the real estate companies ranked 300-500 expect to rush to the top 100, which is relatively risky.
The macro environment is not very conducive to the accelerated expansion of such enterprises, and they have already embarked on the path of expansion. They can only rely on new projects to obtain land as mortgage to withdraw funds in order to maintain the high-speed operation of the enterprise.
Chen Yuan emphasized that such enterprises have limited ability to raise funds from the open market and do not have the ability to publicly develop bonds.
With the relative tightening of trusts, they benefited from the monetary environment of expanding liquidity, and were not affected much.
But the pressure may continue to increase.
"Many developers who are not very capable of funding may be overturned in this storm and drowned in the long river of history. Generally speaking, if they can choose, under the same conditions, buyers tend to give priority to having more strength and status. Real estate company." Wang Yuchen said.
China Youth Daily·China Youth Daily reporter Li Chenhe Source: China Youth Daily