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jiujiang, jiangxi province has launched the reform of the separation of the "three rights" of homesteads. the picture shows the new look of zhushan village, zhangqing township, hukou county after the implementation of the rural homestead system reform on april 7, 2023. (photo courtesy of visual china)

after being shelved for two years, a draft decision was terminated on june 17, 2024.

this document, which aims to break through the civil code's provision that "residential land cannot be mortgaged", is called "decision (draft) on authorizing the state council to temporarily adjust the implementation of relevant legal provisions in the administrative regions of rural residential land reform pilot areas such as changping district, beijing" (hereinafter referred to as the "draft decision"), which authorizes 107 regions across the country to conduct pilot projects for mortgage of residential land use rights.

in june 2022, the draft decision was first submitted to the 13th npc standing committee for deliberation, but due to disagreements among all parties, it was ultimately not put to a vote. recently, the npc standing committee gazette disclosed this information.

cai jiming, a member of the 14th national people's congress finance and economics committee and director of the center for political economics at tsinghua university, told a reporter from southern weekend that attempts to mortgage the right to use homesteads have been made in practice since 2015. in his view, the termination of the draft review is more due to legislative procedural considerations and does not mean the end of the reform of mortgages on homesteads.

"two powers" reform and "three powers" separation

mortgage of homestead use rights is not a new thing. as early as august 2015, the state council issued guidance on pilot projects for mortgage loans of rural contracted land management rights and farmers' housing property rights (referred to as "two rights").

among them, the pilot project on mortgage loans for rural houses broke through the provisions of the then property law and guarantee law that homesteads could not be mortgaged. in december of the same year, the standing committee of the 12th national people's congress passed a relevant authorization decision to allow a pilot project on mortgage of homestead use rights in 59 counties (cities and districts) including jixian county, tianjin, until december 31, 2017, and then extended the authorization for another year.

exploring mortgage of homestead use rights is intended to give full play to the property attributes of homesteads. according to the sampling survey data of the ministry of agriculture and rural affairs, the idle rate of rural homesteads in china was 18.1% in 2019. from 2000 to 2016, china's rural permanent population decreased from 808 million to 589 million, a decrease of 27.1%, but during the same period, the area of ​​rural homesteads increased from 247 million mu to 298 million mu, an increase of 20.6%.

cai jiming served as a member of the national committee of the chinese people's political consultative conference from the 9th to the 11th terms, and also served as a representative of the 12th and 13th national people's congress. because of his long-term attention to the land system, he was called the "land representative."

he explained to the southern weekend reporter that under the planned economic system, the right to rural collective housing land was a welfare benefit granted to farmers. however, with the development of the economic level, more and more people not only have a place to live, but even own multiple houses. at this time, houses not only have the function of living, but also have property attributes as real estate.

on december 23, 2018, the state council submitted a report on the pilot of the "two rights" to the standing committee of the national people's congress. the report said that by the end of september 2018, a total of 51.6 billion yuan of mortgage loans for rural houses had been issued in 59 pilot areas.

the pilot has achieved certain results, but the report also mentioned that the development of rural housing mortgage loans is extremely uneven in different regions, and the reform of the homestead system has not been completed and there is a lack of legal basis for judicial disposal. the transfer and disposal of rural houses still face great obstacles, and rural housing mortgage loans have not formed an effective closed loop.

in fact, when the "two rights" pilot ended at the end of 2018, the legal barriers to agricultural land mortgage loans were basically eliminated, but there were still some obstacles to agricultural housing mortgage loans, and it is planned to be included in the overall consideration of the "three rights separation" reform of homestead land.

the exploration of the "three rights separation" of homesteads was first proposed in the central document no. 1 in 2018. the so-called "three rights" refer to ownership, qualification rights and use rights. lu hao, then minister of natural resources, publicly stated that by the end of 2018, the pilot scope of the "three rights separation" of homesteads was narrow and the time was short. no replicable and popularizable institutional experience had been formed, and the understanding of all parties was inconsistent, which needed in-depth research.

another land reform carried out in the same year as the "two rights" reform also involved homesteads.

at the beginning of 2015, the former ministry of land and resources launched the rural "three land" reform in 33 counties (cities and districts) across the country, namely rural land expropriation, collective commercial construction land entering the market, and homestead management system reform. in 2015, the pilot was extended twice and ended at the end of 2019.

several experts interviewed told southern weekend reporters that although the document on the "three pieces of land" reform did not mention the rural housing mortgage pilot program, since many of the 33 counties involved in the "three pieces of land" reform overlap with the areas of the "two rights" reform pilot program, in practice, the "three pieces of land" reform also involves rural housing mortgage reform.

in june 2020, the central committee for deepening reform reviewed and approved the "pilot plan for deepening the reform of the rural homestead system", and a new round of homestead reform began. this pilot focuses on the "three-rights separation" of homesteads, exploring ways to improve the systems of homestead allocation, transfer, mortgage, withdrawal, and application.

compared with the previous two reforms, this reform pilot has a larger scope and is being carried out in 104 counties (cities, districts) including changping district, beijing, and three prefecture-level cities including shaoxing city, zhejiang province, chuzhou city, anhui province, and ziyang city, sichuan province.

conflict

in may 2021, cai jiming, as director of the central economic committee of the china democratic league and director of the center for political economics research at tsinghua university, went to shaoxing, one of the three pilot cities for the new round of homestead reform, for investigation.

local officials told him that one of the problems they encountered in practice was the conflict between the pilot reform and the current law. the 2021 civil code still continued the provisions of the original property law and guarantee law - homesteads cannot be mortgaged. as a member of the finance and economics committee of the 13th national people's congress, cai jiming reported the problems encountered in the investigation to the standing committee of the national people's congress.

in june 2022, the standing committee of the national people's congress conducted its first review of the draft decision submitted by the state council for review. the draft plan is for the standing committee of the national people's congress to authorize the state council to allow mortgage loans with citizens' housing property rights (including homestead use rights) in 107 pilot areas. this adjustment is planned to be implemented on a trial basis before april 30, 2024.

the npc standing committee bulletin shows that during the deliberation, a member of the standing committee said, "the mortgage of homestead use rights is relatively complex and sensitive, and it is recommended to consider it carefully."

based on this consideration, with the approval of the party central committee, the chairman's meeting decided not to put the draft to a vote for the time being.

one year later, on june 25, 2023, the general office of the standing committee of the national people's congress sent a letter to the general office of the state council, asking it to give its opinion on whether to continue reviewing the draft.

on august 3, 2023, the general office of the state council replied that the reform of the homestead system should be carried out prudently. given that this round of pilot projects is less than a year away from ending, it is recommended that the ministry of agriculture and rural affairs and the people's bank of china work with relevant parties to conduct in-depth research on the key issues raised during the review, summarize the pilot experience, and put forward opinions and suggestions on whether to continue the pilot exploration. these opinions and suggestions should be reported to the party central committee in accordance with procedures, and after the next reform deployment is clarified, the issues to be reviewed in the "draft authorization decision" should be comprehensively considered.

since then, the draft has not been scheduled for further review at the standing committee meeting.

the legislative law stipulates that if a bill included in the review of the standing committee meeting has not been reviewed again for two years due to being put on hold, the chairman's meeting may decide to terminate the review and report to the standing committee.

it is not uncommon for the legislature to terminate the review of a draft law. the land management law experienced a "termination of review" when it was being amended: in december 2012, the draft amendment to the land management law was submitted to the standing committee of the national people's congress for review, and the review was terminated after being shelved for two years. it was not until december 2018 that the land management law was amended again. less than a year later, in august 2019, the amended land management law was voted through.

in addition, the administrative litigation law, which was initiated for revision at the end of 2022, was terminated in august 2023; in june 2024, the draft civil enforcement law was also terminated after being shelved for two years.

by june 2024, the review period of the "decision on authorizing the state council to temporarily adjust the implementation of relevant legal provisions in the administrative regions of rural homestead reform pilot areas such as changping district, beijing" will be two years. on june 17, the constitution and law committee of the national people's congress reported to the chairman's meeting that the issue of mortgage of homestead use rights is relatively complicated and that the issue of authorization for pilot projects should be considered after the party central committee clarifies the next step of reform deployment. after communicating with relevant parties, it is recommended to terminate the review of the draft. the chairman's meeting passed the report.

the focus is on "circulation scope"

the new round of homestead system reform that began in 2020 has actually failed to obtain authorization from the standing committee of the national people's congress to allow the mortgage of homestead use rights.

however, in practice, some places have tried it. ningyuan county, yongzhou city, hunan province is one of the 107 pilot areas. in early december 2021, chen'an village, renhe town, ningyuan county held a ceremony to issue the first certificate of yongzhou homestead use rights and the first mortgage loan.

the yongzhou daily reported that on that day, 10 villagers in chen'an village obtained rural housing land use rights certificates. the heads of the ningyuan branch of the construction bank and the ningyuan branch of the agricultural bank of china issued them housing land mortgage loan credit certificates and granted them a credit of 3 million yuan on the spot.

"after getting the certificate, we can go to the bank for mortgage loan. the assets become active funds, which provide a source of fresh funds for our industrial development." a village representative said at the scene.

yiwu city, zhejiang province, is a pilot area for two consecutive rounds of homestead reform. according to data listed in the paper by qian hongpeng, a lecturer at the yiwu municipal party school, as of the end of 2022, 27 financial institutions in yiwu city had issued more than 27,000 homestead mortgage loans with a total loan amount of more than 19 billion yuan.

a scholar who has visited the pilot areas for research told the southern weekend reporter that this round of pilots has not made much of a breakthrough in terms of mortgage of homestead use rights. in the scholar's view, this round of reforms has a total of nine items, which require finding out the number of homesteads, counting the members of collective economic organizations, and building basic work such as data systems, all of which take a lot of time. "the pilot areas don't need to bite the bullet on this 'hard bone'," and even if some places have tried, they have basically continued the approach of the first round of pilots.

he believes that if the scope of homestead transfer is not expanded, it will be difficult to promote the mortgage of use rights. although during the reform pilot, yiwu city, zhejiang province, yujiang district, yingtan county, jiangxi province and other places expanded the scope of transfer to the county, most places still limit it to the collective economic organization.

there are no specific provisions in china's current laws restricting the transfer of homestead use rights. the relevant regulations are mainly reflected in the normative documents issued by the state council. for example, the "notice on strictly implementing laws and policies on rural collective construction land" issued by the general office of the state council in 2007 mentioned that "urban residents are not allowed to purchase homesteads, farmers' houses or 'small property rights houses' in rural areas" and "homesteads can only be transferred to members of the collective who meet the conditions (no homesteads or the area does not meet the standards)".

on november 28, 2022, the "interim measures for the management of rural residential land (draft for comments)" drafted by the ministry of agriculture and rural affairs also mentioned that "the right to use residential land can be transferred or donated to members of the collective economic organization who meet the conditions for applying for residential land" and "it is strictly forbidden for urban residents to purchase residential land in rural areas."

under such circumstances, few collective members are willing to take over the mortgaged homesteads due to the "one household, one house" rule, and the village collective is even less willing to recover the right to use the homesteads for a fee, making it difficult for the mortgagee to actually deal with the property. this has affected the willingness of banks to carry out homestead mortgage loan business.

in cai jiming's view, the reform of the homestead system is generally cautious and should focus on increasing efforts to promote it. "the income gap between urban and rural residents in my country is 2.5 times, and the gap in property income is as high as more than 10 times." he believes that only by activating the transfer of homestead use rights can its property function be brought into play, thereby broadening the channels for farmers to obtain property income. during the 2024 national "two sessions", he proposed to expand the scope of transfer of homestead use rights.

opponents are worried that if the transfer of homesteads is allowed, urban residents may enter the countryside and hoard land on a large scale, which may cause farmers to be displaced and affect social stability.

wang jian, associate professor at the college of land science and technology of china agricultural university, believes that homesteads still have the property of protecting farmers, and if the right to use homesteads is mortgaged, it will be a challenge to this right of protection. he believes that under this circumstance, the future direction of the reform of mortgage of homestead use rights is unclear.

"it is very unlikely to expand the scope of homestead transfer in terms of policy," zheng fengtian, a professor at the school of agriculture and rural development of renmin university of china, told southern weekend. in his opinion, once this loophole is opened, urban residents may hoard homesteads. if urban residents really want to build rural areas, they are allowed to rent homesteads in rural areas. "the focus of future homestead system reform is to improve the homestead withdrawal mechanism and explore the revitalization and utilization of idle homesteads."

future directions

in july 2024, the third plenary session of the 20th cpc central committee reviewed and adopted the "decision of the cpc central committee on further comprehensively deepening reforms and promoting chinese-style modernization" (hereinafter referred to as the "decision"). cai jiming noted that in the section "improving the system and mechanism for urban-rural integrated development", it was emphasized again to "deepen land system reform" and "allow farmers to revitalize and utilize their legally owned housing through leasing, equity investment, cooperation, etc."

in his opinion, this sentence in the decision has opened up space for the reform of the rural housing land system. according to the principle of "real estate and land are integrated, and land follows the house", since farmers' houses are allowed to be revitalized and utilized through leasing, equity investment, cooperation, etc., it also means that farmers' housing land use rights are allowed to be transferred between urban and rural areas through leasing, equity investment, cooperation, etc.

zheng fengtian also noticed that in the section on urban-rural integration and development, it was also mentioned that the land rights and interests of farmers who move to cities should be protected, "the land contracting rights, homestead use rights, and collective income distribution rights of farmers who move to cities should be protected, and methods of voluntary paid withdrawal should be explored."

wang jian also believes that instead of discussing how to realize the mortgage of homestead use rights, it is better to pay more attention to the homestead withdrawal mechanism. of course, he emphasized that the exploration of the right to withdraw from homesteads has always been cautious, "because of the fear of forced withdrawal and disorderly withdrawal."

since 2024, many places have issued new real estate policies, giving rewards or discounts to those who withdraw from homesteads, which has attracted attention to the policy of withdrawing from homesteads. fengyang county, anhui province, clearly provides a 50,000 yuan housing purchase reward to those who withdraw from homesteads; nantong city, jiangsu province stipulates that those who abandon homesteads and move to the city to buy houses will be given a certain amount of rewards and subsidies, and the specific standards are determined by the city itself.

on july 24, 2024, han jun, the newly appointed secretary of the party leadership group of the ministry of agriculture and rural affairs, attended a press conference held by the state council information office for the first time. the first question he answered was about rural reform and talked about the withdrawal of homestead use rights.

han jun also said that the introduction of relevant policies must be prudent and not "windy". "spending tens of thousands of yuan to buy out the land may not be cost-effective for the long-term interests of farmers. in this regard, we must leave a way out for farmers and consider their long-term interests."

zheng fengtian noted that after the third plenary session of the 20th cpc central committee, relevant policies were introduced one after another. on july 31, 2024, the state council issued the "five-year action plan for deeply implementing the people-oriented new urbanization strategy"; on august 5, the ministry of natural resources issued the "opinions on learning and applying the experience of the "ten million project" to deepen the comprehensive land remediation work in the whole region".

he believes that both documents will push farmers to withdraw from homesteads. zheng fengtian explained that many farmers who moved to cities are unwilling to withdraw from homesteads because their rights and interests are not protected in cities. under the promotion of the new urbanization strategy, if farmers' rights and interests in cities can be guaranteed, such as social security and compulsory education for their children, which are equal to the registered residents in the places where they moved to, their desire to withdraw from homesteads will be greatly enhanced. the core of the overall land consolidation is homesteads, contracted land, and collective business construction land.

as for how to implement the mechanism of withdrawing homesteads, zheng fengtian believes that due to the large differences in development across the country, the state can only issue macro policies and stipulate some principled contents, such as the document on comprehensive land management, which mentions "strictly prohibiting urban residents from purchasing homesteads in rural areas" and "not forcing farmers to move into buildings". the core of the specific implementation policy is still at the county level, "they play a leading role."