Chinese land-use rights: What happens after 70 years?
05 October 2013
A Chinese man holds up his real estate certificate in front of his nail house.
Xinhuanet Beijing October 4 report — After the 70-year lease/land-use
rights for commercial residential housing expires, what do we do about
our homes? Are the land-use rights automatically renewed/extended for
several decades, or must a land transfer fee based on the land prices
of the time be paid, or are there other new ways? With the “using the
home for elderly income” [reverse mortgage] policy beginning to be
tested in certain areas, the “what happens to houses after 70 years”
problem has once again become an urgent and real issue.
Worries about 70 years
Chen Zhuoy, who just recently purchased a commercial residential
property in Beijing, originally didn’t think about what happens in 70
years, until she inadvertently saw the “Beijing State-Owned
Construction Land Supply Procedures (Trial Implementations)”. Clearly
stipulated in this 2005-issued local legislation, “at the expiration of
paid land-use, land-users who need to continue using the land should
submit an application with the land administration department one year
before the expiration of the land-use term, and those who did not apply
or who applied but were not approved shall have their land-use rights
returned without compensation to the government at the expiration of
“Expiration”, “not approved”, “returned without compensation”, such
wording made Chen Zhuo begin to worry about the fate of her home. Upon
thinking that one day the home her entire family had poured out all
their money for may not be hers, Chen Zhuo’s heart was filled with
worry. “In 70 years, is my home still my own? Or to put another way,
what do I have to do for it to continue being mine?”
This is a question that every commercial residential property owner has to face.
In our country, the highest number of years for land-use rights
transferred is: Residential Use 70 Years. After the expiration of the
70 years of land-use, the land is returned to the country while the
buildings on that land remain under the possession of their owners.
However, “with the skin gone, where does the hair adhere to”, so the
expiration of land-use rights actually implies the expiration of
ownership of the entire building, and this is precisely the root of
people’s worries about “70 years later”.
According to the provisions of Article 149 in the “Property Law”, at
the expiration of land usage rights for residential construction, it
shall be renewed automatically.
According to the provisions of Article 22 in the “Law on Urban Real
Estate Administration”: At the expiration of the stated term in the
contract for the transfer of land-use rights, land-users who need to
continue using the land should submit an application for extension one
year before the expiration of the land-use term, and all land that
needs not be reclaimed in accordance with public interest should be
given approvals. Extensions shall require a new transfer of land-use
rights contract to be signed, and land-use transfer fees paid in
accordance with regulations.
So it is clear that in terms of the law, home-buyers have the right to
apply and obtain extensions upon the expiration of their land-use
rights, but there the specific clauses of the law provide no clear
provisions on the the standards or procedures for the fees of extending
land-use rights. This vacuum in the law undoubtedly leaves people space
for imagination, “at the extension 70 years later, just how much of a
price do we still have to pay?”
Various speculations about what happens after land-use rights expire
At a 2011 land auction in Shanghai, the “corresponding residual value
for grantor’s reclaiming and compensation” provision amongst the
prerequisites for pre-application had aroused a new post-“Property Law”
round of debate about how the expiration of land-use rights would be
To reapply for land-use rights requires paying an additional land-use
right transfer amount, but how much needs to be paid, according to what
guidelines, and whether or not owners who possess residential property
rights [to the buildings on the land] are willing to pay it, are able
to pay it, and what if one homeowner is unwilling to pay it, then how
is the building on the land supposed to be handled? For the moment,
there are no [government] policies whatsoever capable of answering this
series of questions.
Some people pessimistically believe that when the 70-year land-use
rights expire, it’ll be a situation where “the building follows the
land and the government will compensate”. After all, the value of
buildings drops with the passing of time whereas the value of land is
the exact opposite. However, this social and economic costs involved in
such a handling are excessively huge, and in the Shanghai Yiju Real
Estate Research Institute Vice-President Yang Hongxu’s view, this is
unlikely to become a widespread method [of handling this problem].
Yang Hongxu believes that, in accordance with the “automatic
renewal/extension” spirit of the “Property Law”, ensuring the legal
rights of property owners ought to be the starting point of legislation
and that the possibility is extremely small that the land would be
simply taken back or that people would have to pay for the cost of the
land based on its market price at the time. “The government will adjust
the policies in a timely manner, and a relatively complete and fair
law/legislation will definitely be enacted before most land-use rights
An incomplete land system reform
In 1990 May 19, the People’s Republic of China State Council Decree No.
55 “The Provisional Regulations for the Provision and Transfer of
People’s Republic of China on Urban State-Owned Land Use Rights” was
announced and enacted, with Article 12 of the regulation stipulating:
The highest number of years of land-use rights are to be determined by
the following applications: 70 years for residential use. The
government regulations stipulated that the state, companies, and
individuals can pay for and trade usage-rights.
Although the “70-year land-use rights” issue suffers from controversy
now, looking back on our country’s history of reform and opening up,
it’s not difficult to realize that from the prohibition on the renting
or sale of land to allowing the provision and sale of land-use rights,
this is undeniably a milestone-like progress in the process of economic
development. “70-year land-use rights for residential use” is itself an
important result of land system reform.
In fact, having time limits on land-use rights is not unique. During
the early planning stages of the system, it was influenced by Hong
Kong’s land-use and trade/sale system. Whereas in Malaysia, Singapore,
and other countries, this kind of transfer of land-use rights but not
actual land ownership is also common, with the difference only being in
specific year limits. Given the experience of these countries and
areas, on a foundation of sound relevant legislation and policy, based
on a respect for citizens’ private property. the extension of land-use
rights will not cause serious social problems or infringe on the lawful
interests of property owners.
However, from the formulating of our country’s relevant laws to now,
over 20 years have passed. With the laws and regulations of the time
not excessively touching upon the issue of what would happen 70 years
later, and with the “age” of many commercial real estate increasing, a
problem that was originally left for the future to resolve is becoming
extremely pressing and this piece of land system reform from over 20
years ago urgently needs new footnotes and a more complete system.
“What happens to land-use rights after 70 years” is not just an
individual problem that home-buyers are concerned with, it is a problem
that must be answered for continued China land system reform and