China’s National Financial Regulatory Administration issued five trial measures establishing a financing framework for residential development, individual mortgages, commercial property, urban renewal and real estate trust business. The package advances its priority of adapting property finance rules to the sector’s new development model while meeting reasonable financing needs and protecting homebuyers. Residential development lending will use lead-bank, project-based and ring-fenced fund management arrangements, with banks required to distinguish project risk from wider developer group risk. Loans made under the measure will bring the relevant developments into the housing delivery whitelist mechanism. For individual mortgages on presold homes, disbursement will move from structural completion to completion filing. The rules also adjust debt-to-income limits, extend maximum loan terms, facilitate transfers of mortgaged secondhand homes and tighten oversight of third-party intermediaries. Commercial property loans are divided into development, purchase and operation stages, with tailored requirements for eligibility, use of proceeds, terms and loan management. Financial institutions are directed to establish dedicated urban renewal loans and set financing terms according to project characteristics. Trust companies must strengthen independent due diligence, centralized decision-making, project management, investor suitability controls and ring-fenced fund management, with specific requirements for asset management trusts, nonstandard assets and asset service trusts.

Original source