PBOC, NFRA Issue New Rules on Real Estate Credit Management

China's central bank and the National Financial Regulatory Administration (NFRA) have issued an opinion on reforming and improving real estate credit management and accelerating the building of a new real estate development model, according to Jiemian News. The document sets out a framework for bank lending across the full property chain, including development, sales and operations, and says banks may not lend for land premium payments or related taxes and fees. The rules allow development loans for commodity housing, affordable housing, rental housing and commercial property, with project capital required to be in place before loans are disbursed. They also require a lead bank system for each project, impose loan-tenor limits tied to project progress, and say pre-sale housing loans should generally not exceed 3 years, with a maximum of 5 years, while loans for existing-home sales should generally not exceed 5 years, with a maximum of 7 years. Personal housing loans may run for up to 40 years, commercial property purchase loans for up to 15 years, and group purchase loans for rental housing for up to 30 years. The opinion also says China’s central bank will work with the NFRA on minimum down-payment policies, concentration limits and macroprudential management for property lending. It adds that the central bank will separately set personal mortgage rate policy and that the new rules take effect on the date of issuance, while earlier property-credit notices from 2003, 2006, 2007, 2008, 2010, 2011, 2015 and 2016 are abolished.