Beijing Wall’s Downfall Prompts China Housing Policy Debate

The destruction of a steel gate by angry homeowners in a Beijing compound has sparked an online debate about housing rights in the nation’s capital, and created a new headache for one of China’s largest developers.

The hated gate separated high-end commercial units from cheaper apartments sold for non-investment purposes at the Beijing Emerald Legend compound. The segregating structure at the residential development between the fourth and fifth ring roads in the northeast of the city met its fate on Friday, according to a media report, at the hands of local residents unhappy at perceived unfair treatment.

The community action in the housing project, which was developed by Longfor Properties, adds to the legal risks that the Hong Kong-listed firm and other developers are taking by building walls and fences to segregate their luxury housing from subsidised or rental units. Last September, Beijing’s housing commissio
n threatened that builders would not be granted pre-sale permits if they built physical partitions to separate members of the same community.

The sudden unpopularity of walls creates problems for developers hoping to keep in step with government imperatives to provide more subsidised housing — while still being able to command high premiums for the luxury flats that often co-exist in the same compound.

Housing Price Points Diverge Across Longfor’s Gate

Commercial apartments in the Longfor development are priced at about RMB 70,000 ($10,835) per square metre. On the other side of the wall (which was later restored), units for non-investment purposes are sold at around RMB 22,000 per square metre.

Housing for non-investment purposes is a regulatory category in Beijing. In order to acquire land, property developers have been required for the last two years to build these subsidised units together with more upscale commercial units in the same community as part of the government’s campaign to ensure adequate affordable housing.

The social housing units may not be traded on the market for the first five years after purchase, and owners must pay a 30 percent tax on the profits if they sell the property after that period.

Tear Down that Wall, Urge Some Chinese Netizens

China’s netizens were ambivalent over the demise of the community-splitting structure. In online comments over the weekend, some said that the gate’s downfall would hurt the commercial value of the property, pointing out that the units for non-investment purposes are in fact subsidised by the owners of the commercial units who paid more.

“Residents from the subsidised units are taking advantage [of those of commercial apartments], trying to enjoy service that is worth $7 by paying just $3,” said a user on the Sina Weibo social platform. “I would not wish to live with these people if I were a resident there.”

Those who supported the fence-wreckers argued that the physical barrier blocks firefighters’ access and infringes on the rights of the residents in the subsidised flats.

The controversy over segregating high-end homes from social housing comes amid a central government campaign to promote affordable housing for the nation’s urban dwellers, by bringing more subsidised flats and rental homes to the market. Among a series of recent policy moves, the Shanghai government in November offered six parcels of land exclusively for rental home development, which will provide 20,000 units.