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Meng Chun

Suggestions on promoting affordable housing construction by means of PPP model

2014-09-19

By Meng Chun, Department of Macroeconomic Research, DRC; Wang Jingsen, Research Institute for Fiscal Science, Ministry of Finance

Report No 128, 2014 (Total No 4627)

Summary:

China is now undertaking arduous work in affordable housing construction with great financial burden so it needs to conduct financing innovation and use the PPP (public-private partnership) model, a government service or private business venture that is funded and operated through a partnership of government and private sector companies to get social capital involved.

The PPP is feasible for China's affordable housing construction for the following reasons: favorable policies, good operation basis and relative stable investment return.

The report proposes the methods of build-operate-transfer (BOT), build-operate-sale (BOS), real estate investment trust (REITs) and housing cooperatives for newly-constructed public rental housing. It also proposes purchasing and storage for some unused housing and the establishment of a PPP guide fund mechanism for affordable housing.

Many other measures, including working out relevant laws and regulations; improving land, fiscal and financial policies; and setting up a PPP coordinating organization could be conducive to promoting affordable housing construction.