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Chinese Researcher: 70 Percent of Housing Price Goes to Local Government

Fu Guangjun, a Researcher at the State Administration of Taxation, reported that the local government takes away the majority of the proceeds from housing sales.

In Beijing, the land cost is 60 percent of the housing price. The business taxes on the real estate developers along with the house transaction fees account for another 10 percent. The Beijing government claims 70 percent of the housing price. Thus the developer’s is left with a profit of only 10 percent. Therefore, the key to reducing the housing price is to reduce the cost of the land.

Fu also pointed out a problem with the deed. In China, the deed has two parts: the certificate of ownership of the property and the certificate of the right to use the land. The land belongs to the state and the property owner only has a right to use the land for 70 years. This has created a conflict: the property ownership is a permanent ownership, but in reality the property can’t be used in perpetuity as the land right is fixed at 70 years, even though, in reality the land lasts forever.

Source:, May 10, 2017