The feasibility of expanding the pilot scope of REITs to the field of housing rental will be discussed with relevant parties

2022-05-14 0 By

On February 18, the China Securities Regulatory Commission (CSRC) published a total of 37 responses to the proposals of the fourth session of the 13th National Committee of the Chinese People’s Political Consultative Conference (CPPCC) and suggestions of the fourth session of the 13th National People’s Congress (NPC).In a response to a proposal on strengthening all-round financial supervision to combat excessive financialization, the CSRC said it “will steadily support the long-term sustainable development of the rental apartment industry.”In addition, the feasibility of extending the pilot scope of REITs to the field of housing rental will be discussed with relevant parties.(The following is the text of the announcement.) We have received the Proposal on Strengthening All-round Financial Supervision and Combating Excessive Financialization.After careful study, we have given the following answers to the questions concerning the scope of the responsibilities of the CFPA: 1. Strengthening supervision over licensed Business by Non-licensed Institutions THE CFPA will insist that all financial activities be subject to financial supervision and that all financial businesses must be licensed.For non licensed Internet companies, financial institutions such as science and technology company that intends to engage in securities fund class licensed business management must be licensed I will stick to the financial business, requirements before the relevant agencies shall, in conducting related business in accordance with the rules apply to the corresponding license or qualification in accordance with the law, and comply with the current laws and regulations, take effective measures to prevent risks.In the early stage, I will continue to cooperate with the People’s Bank of China to strengthen the supervision of Internet finance, put forward rectification requirements for prominent problems, and require online platform enterprises to find problems carefully and make rectification in a steady and orderly manner.The Party Central Committee and The State Council attach great importance to the standardized development of online platform enterprises, and have made a series of important arrangements and put forward clear requirements for strengthening the financial supervision of platform enterprises and standardizing the order of economic competition on platform.I will strictly implement the spirit of relevant instructions and supervise the Internet consumer financial asset securitization (ABS) business in accordance with laws and regulations.The issuance of ABS products by Internet finance platforms on exchanges shall strictly follow the rules of the ASSOCIATION on the issuance, trading and information disclosure of ABS, and comply with the regulatory requirements of the competent authorities of the industry on the leverage ratio of small loan companies.At present, consumer financial ABS products on the exchange market are operating normally without risk.Three, safely support long rent apartment industry long-term sustainable development of the operation mode of the rent the apartment generally includes three classes, the “asset light” mode (i.e. hold or transfer the property to the client to provide operational management services, fees income), part of the “asset light” rent the apartment operation enterprises to adopt “high in low” and “long close to pay short” such as excessive financialization characteristics, highThe risky business model, which involves the abuse of rental loans for radical expansion, is not sustainable. In addition, it also faces high risk of capital chain fracture and liquidity due to the impact of the epidemic and the downward economic environment.Compared with the medium and light asset modes, the “asset-heavy” mode has more stable returns, better qualification of participants, and safer and more stable overall operation after large-scale operation.However, the “asset-heavy” long-term rental model has a large initial investment and a long return cycle. Without long-term financial support provided by appropriate supporting policies, it is difficult to form a large-scale operation system.In order to implement the policy requirements of the CPC Central Committee and The State Council on both leasing and purchasing and to promote the development of the housing rental market, THE ASSOCIATION has carried out the following work in recent years: first, orderly carrying out the securitization of housing rental assets.In April 2018, CCIA and the Ministry of Housing and Urban-Rural Development jointly issued the Notice on Promoting The Work related to The Securitization of Housing Rental Assets (CSRC no.30, 2018) to carry out housing rental ABS business in an orderly manner.In order to prevent risks, the operation modes of long-term rental apartments are classified and implemented: ABS products are encouraged to be issued for “asset-heavy” long-term rental apartments;Restrict the issuance of ABS products of “asset-light” long-term rental apartments, and prevent radical expansion and excessive financing of enterprises.By the end of 2020, a total of 35 residential rental ABS had been issued in the exchange bond market, with a total volume of 34.5 billion yuan. The products operated normally without risk.The second is to actively study the feasibility of housing rental real estate investment trusts (REITs).The main purpose of REITs is to obtain stable cash flow such as real estate rent and fees, which is consistent with the characteristics of the housing rental industry that relies on stable rental income to achieve long-term investment returns.From the perspective of overseas mature markets,REITs are one of the most important suppliers of rental housing market and the most important operation mode of long-term rental apartments.At present, CFNA is working with the National Development and Reform Commission to pilot REITs in the field of infrastructure.In the future, I will summarize the pilot experience of infrastructure REITs in a timely manner, strengthen communication with the Ministry of Housing and Urban-Rural Development and other ministries and commissions, and discuss the feasibility of extending the pilot scope of REITs to the field of housing rental, so as to promote the long-term sustainable development of the industry.Thanks for your concern and support for the development of the capital market, and we welcome your comments and suggestions.China Securities Regulatory Commission