On August 26, 2019, the Standing Committee of the National People’s Congress amended the Land Administration Law of the People’s Republic of China and the Urban Real Estate Administration Law of the People’s Republic of China through the Decision of the Standing Committee of the National People’s Congress on Amending the Land Administration Law of the People’s Republic of China and the Urban Real Estate Administration Law of the People’s Republic of China (the “Decision”). The Decision will go into effect on January 1, 2020. The amendments include the following:
1. Removing the market entry legal barriers for collectively operated construction land
The Decision deletes the original requirement that “any unit or individual who needs to use a land for construction is required to apply for use of state-owned land ” under Article 43 of the Land Administration Law and provides that if a land is determined to be used for business purposes, such as industry or commerce under general land utilization planning or urban and rural planning, and the land has been registered as collectively operated construction land, the land owner may provide the land for use by businesses or individuals through a transfer or lease. A written contract in which the land boundary, area, duration of construction, period of use, land use, planning conditions and other rights and obligations of both parties are specified is required.
The transfer or lease of collectively operated construction land shall be subject to the approval of at least two-thirds of the villagers’ assembly or of the villager representatives in the subject collective. The right to use collective construction land by way of a transfer may be further assigned, exchanged, used as capital contribution, provided as a gift or mortgaged, unless otherwise stipulated under law or contract with the land owner or the rightful land user.
For the transfer of usage right to or the lease of collectively operated construction land the maximum term, the transfer, exchange, use as capital contribution, provision as a gift, mortgage, etc., shall be implemented in reference to state-owned construction lands of the same type. Specific measures shall be formulated by the State Council.
2. Reforming the rural land expropriation system and clarifying the circumstances in which expropriation is permitted
Article 45 of the new Land Administration Law defines public interest for the first time and stipulates that expropriation of land collectively owned by farmers may be conducted for public interest needs in any of the following circumstances: (1) the land is needed for military and diplomatic purposes; (2) the land is needed for a government agency’s infrastructure development project for energy, transportation, water conservancy, communications and postal services; (3) the land is needed for public enterprises for technology, education, culture, sanitation, sports, protection of ecological environment and resources, prevention and mitigation of disasters, cultural heritage protection, general community services, social welfare, public utilities, special assistance to entitled groups, and protection of heroes and martyrs as implemented by government agencies; (4) the land is needed for poverty alleviation relocation and protective housing projects implemented by government agencies; (5) the land has been set as part of urban development land under the general land usage plan and is needed for whole-area development and construction as implemented by a local people’s government agency above the county level that has been approved by a people’s government above the provincial level; or (6) any other circumstance in law where lands collectively owned by farmers may be expropriated for public interest.
Meanwhile, fair and reasonable compensation should be provided to preserve the original standards of living and long-term livelihood of the farmers whose land is expropriated. For land expropriation, a sufficient amount of land, placement, housing compensation and other attachments or green crops shall be provided, and the social security fees for those farmers shall be arranged.
3. Reforming the rural residential land use system
Article 62 of the new Land Administration Law stipulates details about the reform of the residential land use system. A rural household can only own one lot of residential land with an area not exceeding the standards imposed by the province, autonomous region or municipality under the direct jurisdiction of the State Council. In regions with less available land where it is not possible to ensure one lot of residential land for each household, the county people’s government may, with full respect to the wishes of rural villagers, take measures to guarantee home ownership of rural villagers based on the standards imposed by the province, autonomous region or municipality under the direct jurisdiction of the State Council. Rural villagers who have registered their households in cities may voluntarily withdraw from their residential land lot with compensation, and rural collectives and their members are encouraged to make good use of idle residential lands and housing units.