On November 14, the official website of China Banking and Insurance Regulatory Commission (hereinafter referred to as " China Banking and Insurance Regulatory Commission ") issued a message saying that in order to support high-quality real estate enterprises to rationally use pre-sale supervision funds, prevent and resolve the liquidity risks of real estate enterprises, and promote the stable and healthy development of the real estate market, the China Banking and Insurance Regulatory Commission, the Ministry of Housing and Urban-Rural Development, and People's Bank of China jointly issued the "Notice on the Work of Commercial Banks to Issues a Letter of Guarantee to Replace Pre-sale Supervision Funds" (hereinafter referred to as the "Notice"), guiding commercial banks to issue guarantee to replace pre-sale supervision funds to high-quality real estate enterprises in accordance with the principles of marketization and rule of law.
Industry insiders analyzed that combined with the favorable policies released by multiple regulatory authorities, the confidence in the real estate market is expected to be further boosted, and the superposition of multiple policies can better exert policy effects; the next step is more important to promote market sales stabilization. Only when corporate sales collections are significantly improved can the real estate industry truly resume stable development.
The three departments jointly issued the "Notice" to guide commercial banks to issue letters of guarantee to high-quality real estate companies to replace pre-sale supervision funds. Photo/IC photo
Direction:
Prevent and resolve liquidity risks of real estate companies
According to the website of the China Banking and Insurance Regulatory Commission, the issuance of the "Notice" is to support high-quality real estate companies to rationally use pre-sale supervision funds, prevent and resolve liquidity risks of real estate companies, and promote the stable and healthy development of the real estate market.
The Notice proposes that commercial banks are allowed to make independent decisions based on the principles of marketization and rule of law, on the basis of fully evaluating the credit risks, financial status, reputation risks of real estate enterprises, etc., and carry out pre-sale supervision funds business with high-quality real estate enterprises; after the funds in the supervision account reach the supervision quota stipulated by the housing and urban-rural development department, real estate companies can apply to commercial banks to issue funds within the supervision quota.
" Central Bank , the China Banking and Insurance Regulatory Commission has just jointly issued 16 financial policies to support real estate, and the real estate market has ushered in favor of pre-sale regulatory funds. It can be seen that this is a clear positive signal." A real estate company head told the reporter of Beijing News , "This shows that the purpose of policy is to protect the main body of the enterprise and stabilize the market. The "Notice" of the three departments can be understood as real estate companies can withdraw pre-sale funds through letters of guarantee to improve their liquidity. It can be said that they fundamentally provide strong support to real estate companies."
In this regard, Li Yujia, chief researcher of the Guangdong Housing Policy Research Center, believes that at present, the supply and demand ends of the real estate market are mutually restricted, and to achieve "security and delivery of buildings" and industry stability, the supply and demand ends must simultaneously make efforts and support each other to stabilize expectations. The recent policy is this tone. The "replacement of guarantee letters" proposed in the "Notice" is a policy on the supply side, and on the supply side, there are also a package of relief measures such as 16 financial policies around the guarantee and payment of buildings; of course, the recent policies on the demand side are also "increasing efforts", and the supply and demand ends work together, and there is hope for the stability of the property market.
Key:
The replacement amount of the guarantee letter is clearly restricted
It is worth noting that the "Notice" clearly states that the guarantee letter can only be used to replace funds within the supervision amount of the pre-sale fund supervision account established in accordance with the law and regulations. The replacement amount shall not exceed 30% of the funds required to ensure the completion and delivery of the project in the supervision account, and the replacement supervision funds shall not be less than 70% of the funds required to ensure the completion and delivery of the project in the supervision account. What are the specific requirements for the amount and term of the guarantee letter of
? Relevant officials from the three departments said in response to questions from media reporters that when funds within the regulatory quota are allocated and used, the amount of guarantee letter will be reduced accordingly to ensure that the funds in the regulatory account are always no less than 70% of the funds required for project completion and delivery. If a real estate company fails to make up for the difference funds in the regulatory account, the amount of the guarantee letter shall not be adjusted. In addition, commercial banks are required to reasonably determine the guarantee period to ensure that they match the project construction cycle .
According to the "Notice", commercial banks with regulatory ratings of 4 or below or asset size below or whose assets are less than 500 billion yuan shall not engage in the business of replacing pre-sale supervision funds for letters of guarantee replacement; at the same time, commercial banks shall not issue letters of guarantee replacement pre-sale supervision funds to real estate companies that are the main shareholders, controlling shareholders or related parties of the bank. Enterprise Group Financial Company and other Non-bank financial institutions shall not issue letters of guarantee to replace pre-sale regulatory funds.
For the highly-watched guarantee process, the above-mentioned relevant person in charge introduced that if a real estate company provides a guarantee issued by a commercial bank and requests the housing and urban-rural development department to release the corresponding amount of funds for the pre-sale funds supervision account, the supervision account bank should cooperate with the housing and urban-rural development department to do the necessary review work. After the housing and urban-rural development department research and agree, the housing and urban-rural development department will issue an allocation order to the supervision account bank; the supervision account bank will make funds allocated according to the allocation order of the housing and urban-rural development department, and reduce the account management amount in equal amounts.
So, how should commercial banks prevent the risks of letter of guarantee business? In this regard, the above-mentioned relevant person in charge pointed out that when commercial banks issue letters of guarantee to replace pre-sale supervision funds, they must refer to the development loan credit standards and select high-quality real estate companies with stable operations and good financial conditions. The guarantee amount shall be fully included in the unified credit quota for real estate companies and their affiliated groups; they must prevent the risk of guarantee business through margin, real estate companies counter-guarantees and other credit enhancement measures, and risk capital shall be set as required by , and risk preparation shall be withdrawn; once advance payment occurs, the bank shall promptly take recourse measures from the real estate companies to preserve the security of the debt. The advance payment shall be fully provided and true classification, and risks shall not be hidden.
In addition, the above-mentioned relevant person in charge said that real estate companies should use the pre-sale supervision funds replaced by letter of guarantee in accordance with regulations, and give priority to project construction, repayment of project due debts, etc., and shall not be used to purchase land, add other investments, repay shareholder loans, etc.; real estate companies should assume the obligation to make up funds in the supervision account as agreed to ensure that project construction is sufficient.
impact:
Multiple policies combined will help real estate companies alleviate their difficulties
Many people in the industry told the Beijing News reporter that a series of policies recently introduced have begun to shift from "protection of projects but not real estate companies" to "protection of high-quality real estate companies", which will help reverse the dilemma of real estate companies financing and effectively curb the "explosion" of enterprises.
Li Yujia said that banks issued a letter of guarantee to replace pre-sale supervision funds, which actually stipulated in the "Opinions on Standardizing the Supervision of Pre-sale Funds for Commercial Housing" issued by the Ministry of Housing and Urban-Rural Development at the beginning of the year. Since last year, various places have optimized the regulatory rules for pre-sale funds and have taken measures to promote the protection of buildings and alleviate the tight capital chain. For example, in November last year, Beijing stipulated that real estate developers can exempt the same amount of regulatory funds with cash guarantee letters issued by non-regulated banks.
"Because the developer has problems such as long financing and misappropriation of pre-sale funds, when debt risks and corresponding risk expectations occur, it is found that the pre-sale funds in the regulatory account are not enough. Local governments need to guarantee the payment of the building, banks need to guarantee the loan rights, trusts need to guarantee rights, construction units need to guarantee project payments, suppliers need materials payments... This may lead to the pre-sale funds supervision account being 'locked'." Li Yujia said, "With the letter of guarantee, the key regulatory funds in the pre-sale funds account (etc. ) can be released. Even if the funds in the account are less than the amount required for the project completion and delivery at this time, the guarantee of bank guarantee is equivalent to maintaining the rules for pre-sale funds supervision. "
In the view of Yan Yuejin, research director of the think tank center of the E-House Research Institute, the introduction of the bank guarantee policy for the three departments actually has a major background, that is, companies that are on the edge of liquidity risk have recently received attention. The setting of the China Banking and Insurance Regulatory Commission this time will help the development of work in various places. The replacement of pre-sale funds through bank guarantees reduces the accumulation of pre-sale funds and has a positive effect on accelerating the use and turnover of such funds.The replaced pre-sale funds have already made great innovations in their use - "can build buildings or repay debts", which will help real estate companies better repay debts through such funds and will also help better resolve debt risks.
Chen Wenjing, Market Research Director of Index Business Department of China Index Academy, said that since 2022, in the face of many development companies' liquidity problems, more than 110 provinces and cities across the country have adjusted their pre-sale fund supervision policies, or relaxed the pre-sale fund supervision provides part of the financial support for real estate companies, or tightened policies to ensure the safety of project construction funds. The three departments' policies put forward detailed requirements on the method of "replacement of pre-sale supervision funds with letters of guarantee" from a national level, which not only allows real estate companies to replace part of the supervision funds with letters of guarantee to improve capital liquidity, but also requires sufficient amounts to be retained in the fund supervision account to ensure the completion and delivery of the project.
Chen Wenjing believes that after the policy is introduced, the pre-sale fund supervision policies in various places are expected to be implemented faster, releasing more liquidity for high-quality real estate companies. In the short term, the policy effect may be limited, but the recent superposition of multiple policies can better exert the policy effect. The next step is more important to promote market sales stabilization. Only when real estate companies have significantly improved sales collection, can the industry truly resume stable development.
Beijing News reporter Zhang Jian
Editor Yang Juanjuan Proofreading Fu Chunyan
