I.Ensure steady and orderly growth of real estate financing

1.Stabilize lending to property developers. Financial institutions are encouraged to support sound development of well-governed and credible real estate firms focusing on property development business. All property developers, be it state-owned or private-owned, should be treated equally. Financial institutions should make a distinction between the risks faced by parent companies and their subsidiaries involved in specific housing projects. Reasonable financing needs of housing projects should be met based on market principles as long as such funds are operated in a close loop for the sole purpose of financing housing projects and creditors’ rights are properly protected. Financing support could be provided by a main bank or a lending consortium. Financial institutions should strengthen the whole-process management of loan approval, disbursement and repayment, with an aim to ensure the safety of funds.      

2.Support reasonable financing needs of homebuyers. Under the national framework, local governments can implement differentiated credit policies suited to local circumstances, such as setting city-specific down payment ratios or mortgage rate floors, in order to meet basic and improving housing demand. Based on the floors set by local governments, financial institutions will then set their down payment ratios and mortgage rates for homebuyers after taking into account their own business performance as well as clients’ risk profiles and credit conditions. Financial institutions can optimize housing finance for new city residents by tailoring mortgage lending rules on first home purchases by eligible new city residents, based on multi-dimensional, scientific and prudential assessments of their creditworthiness, and by streamlining the process of raising and repaying mortgages.

3.Stabilize credit extension to construction companies. Financial institutions are encouraged to lend to commercially-viable projects with manageable risks so that construction firms will have continuous and stable access to financing.

4.Extend outstanding property development loans and trust loans. Financial institutions are encouraged to extend or reschedule outstanding development loans and trust loans based on commercial negotiations with property developers while safeguarding creditors’ rights, with the aim of delivering delayed projects. Developers’ outstanding loans due within the next six months since the release of this Notice can be extended for a year. Such loans can remain in their original category under the loan classification system and in the credit information system.   

5.Keep bond financing stable. Bond issuance by quality developers will be supported. Specialized credit enhancement agencies should support bond issuance by financially sound developers facing short-term difficulties. Bond issuers and bondholders are encouraged to agree on redemption arrangements in advance. Should issuers find it difficult to redeem bonds on the agreed date, negotiated extension or replacement arrangement can be made as appropriate. Bond issuers can also repurchase bonds in domestic and foreign market.

6.Stabilize financing through trusts and other asset management products. The use of trusts and other asset management products to meet reasonable financing needs in the housing sector is encouraged. Trust companies and other financial institutions are encouraged to speed up their business transformation. While strictly complying with regulations on asset management products and implementing risk control measures, they are encouraged to support the reasonable financing needs of property developers and housing projects in a market-oriented and law-based manner. They are also encouraged to provide financial support to project mergers and acquisitions (M&A) by property developers, commercial retirement homes, and construction of rental properties in line with laws and regulations.

II.Ensure completion of pre-sold housing projects

7.Support policy banks to offer special loans for project completion. China Development Bank and the Agricultural Development Bank of China are supported to offer special loans to properly registered borrowers in line with relevant policy arrangements and requirements in an efficient and orderly manner to ensure housing projects are delivered. These loans should operate in a close loop for the sole purpose of accelerating pre-sold housing projects with delivery delays.

8.Encourage financial institutions to provide additional finance. After defining creditor-debtor arrangements under the special lending programs and with judicial guarantee in place, major lenders or lending consortiums of delayed housing projects are encouraged to offer additional finance in a market-oriented and law-based manner, in order to mitigate risks arising from the repayment suspension for unfinished homes.

Financial institutions are encouraged to voluntarily provide additional finance for commercially viable projects, specifically those projects whose sales revenue could cover the cost of special loans and additional finance, or those projects that have well-defined lending and repayment arrangements though their sales revenue could not cover the cost of special loans and additional finance at the same time.

The financial institution providing additional finance to a specific project should be the same lender under the special lending program. To receive such additional finance, a project's existing assets and liabilities should be audited and evaluated by qualified institutions as organized by local governments, and a project-specific solution should be in place. Commercial banks could set up a new sub-item of “additional finance and special loan” under the item of property development loans in their financial statements for statistical and management purposes. In principle, maturity of additional finance should not exceed the maturity of the special loan extended to the same project, with a maximum of three years. Sales revenue of housing projects receiving additional finance should be transferred to special accounts set up by major lenders. Additional finance providers manage the special accounts together with special loan providers. Project loan repayment follows the principle of “last in, first out”. Providers of additional finance and special loans should be repaid first when sales revenue of covered projects is collected.

Additional finance provided in accordance with this Notice within six months after its release should not be downgraded in their risk classification within its maturity. Lenders whose existing and new debts have been separated are treated as qualified lenders. For those additional finance which turned into non-performing loans, their providers and relevant staff should be exempted from liability if they have performed their duties.

III.Risk disposal of distressed property developers

9.Provide financial support to the M&A of housing projects. Commercial banks are encouraged to finance the M&A of housing projects in a prudent and orderly manner, especially the M&A of projects by quality property developers from distressed developers. Financial asset management companies and local asset management companies (referred to as the AMCs hereinafter) are encouraged to draw on their experience and expertise in the disposal of non-performing assets and risk management, and consult with local governments, commercial banks and property developers on risk resolutions to accelerate asset disposal. The AMCs are also encouraged to work with third-party agencies, including law firms and accounting firms, to make asset disposal more efficient. Eligible commercial banks and financial asset management companies can issue financial bonds dedicated to the M&A of housing projects.

10.Explore market-based financing supports. For projects already under judicial restructuring process, financial institutions can design project-specific solutions to help resume and complete housing projects based on the principle of independent decision-making and risk-taking. The AMCs are encouraged to participate in project disposals as bankruptcy administrators and restructuring investors. Qualified financial institutions can prudently explore law-based and market-based approaches such as establishing funds to resolve the risks of distressed property developers, and thus support the completion of housing projects.

IV.Protect the legitimate rights and interests of housing finance consumers in accordance with law

11.Encourage law-based and independent consultations with mortgage holders on deferring repayments of principal and interest. Financial institutions are encouraged to negotiate with homebuyers on extending mortgage repayments in a market-oriented and law-based manner if their property purchasing contracts have been changed or canceled, or if they are under COVID-induced hospitalization, quarantine or unemployment. All relevant parties shall observe the law, honor their contracts and keep their promises. In this process, financial institutions should serve their clients with good faith, communicate more closely with them, and protect their legitimate rights and interests. In the meantime, financial institutions should classify their assets according to relevant regulations. To maintain market order, those who deliberately evade the repayment of financial debts will be punished in accordance with laws and regulations.

12.Protect the credit records of homebuyers whose mortgage repayments are deferred. For homebuyers whose mortgage loans have been rescheduled, financial institutions should report their credit scores based on rescheduled repayment arrangements; for those credit score adjustments ruled or adjudicated by the people’s courts, financial institutions should make such adjustments accordingly. Financial institutions should also properly settle disputes on credit reporting, and protect homebuyers’ creditworthiness in a law-based manner.

V.Ad-hoc adjustment of some financial regulatory policies

13.Extend the grace period if the cap on real estate loans can not be met. For banks that failed to meet the regulatory cap on their loans to developers and mortgage lending on time due to COVID, the PBOC and CBIRC will properly extend the grace period based on objective assessments of the specific circumstances.

14.Periodically optimize the policy on financing for M&A of housing projects. The PBOC and the CBIRC have recently announced some temporary housing-related financial regulatory policies targeting major commercial banks and national asset management companies, in order to accelerate market-based risk clearing. Relevant financial institutions should make good use of such policies. 

VI.Ramp up financial support for rental properties

15.Provide better credit support for rental properties. Financial institutions will be guided to channel more credit to rental housing companies that own rental property business, especially those companies that operate as independent legal entities with a clear-cut business scope, and are specialized in property investment and management. Financial institutions should appropriately design the maturity, interest rate and means of loan repayment, in order to accommodate the medium to long-term funding needs of rental companies. Financial institutions are also encouraged to provide financing in a market-oriented and law-based manner to the development of rental properties through acquisitions and rebuilding of housing projects. Loans issued by commercial banks to certified affordable rental housing are not bound by the real estate loan cap requirement. If a commercial property is converted into and certified as affordable rental housing, then policies for affordable rental housing in terms of the maturity and interest rate on bank loans should apply.

16.Diversify fundraising in rental market. Rental housing companies are encouraged to issue direct financing products such as debenture bonds and covered bonds dedicated to the construction and operation of rental properties. Commercial banks are encouraged to issue financial bonds in support of rental properties. Funds raised could be used to provide additional loans to rental property development and operation. Pilot programs on Real Estate Investment Trusts (REITs) should be pushed forward steadily.