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As a part of China’s green efforts a major change in the country’s land use rights are expected, writes Shanghai-based lawyer Amy Sommers in the Green Buildings Blog, republished here.
When China opened up its country for business, foreign companies could typically get a lease of the ground for up to 70 years, leaving open the question what would happen afterward. For industrial and commercial property was up to 50 years, and especially in Shenzhen, where the development started, questions were being asked.
Amy Sommers, Partner at Squire, Sanders & Dempsey, LLP, now has the beginning of good news:

With respect to Land Use Rights (LUR) for residences, the Property Law has now clarified that the contracts will definitely be extended; the only question is the price. As I understand it, the government is considering a couple of different alternatives. One would include using an annual property tax approach, similar to what we have in the US, which would then generate regular revenue streams. However, whether to take this approach or to use some hybrid of it and the payment of ‘grant fees’ remains to be sorted out.

Most likely local governments – who now make most of their revenue from land use rights, more than on tax revenue – have to be convinced that this practice, common in the US and large parts of Europe, should be introduced in China too.

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Amy Sommers belongs to the China Speakers Bureau with leading speakers on all China-related issues. When you need her at your conference, let us know.

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