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No.22 of 2010 (General Serial No. 68): Announcement of Audit Investigation Findings of Government Investment in Subsidized Housing in 19 Provinces and
2011-04-14日   Soure : :

Audit Investigation Findings of Government Investment in Subsidized Housing in 19 Provinces and Cities from 2007 to 2009

(Announced on November 17, 2010)

In accordance with the provisions of the Audit Law of the People’s Republic of China, in 2009 and 2010, the National Audit Office (CNAO) conducted two audits separately on the situation regarding subsidized affordable housing security funds from 2007 to 2009 and the situation regarding housing renovation in shanty towns subsidized with central government investment since the fourth quarter of 2008, in the 19 provinces (municipalities, hereinafter referred to as 19 provinces and cities) of Beijing, Tianjin, Shanxi, Liaoning, Heilongjiang, Shanghai, Jiangsu, Fujian, Shandong, Henan, Hubei, Hunan, Guangdong, Hainan, Chongqing, Sichuan, Yunnan, Shaanxi and Gansu, with emphasis on 32 cities above the prefecture level. The audit findings are hereby announced as follows:

1.     Overall Situation

From 2007 to 2009, the 19 provinces and cities raised 103.88 billion yuan of affordable low-rent housing security funds and acquired 5.443 billion yuan of central government subsidy for housing renovation in shanty towns. The 32 key cities surveyed raised 44.865 billion yuan of affordable housing security funds, of which: 6.725 billion yuan were central government subsidy, accounting for 14.99%; 29.679 billion yuan were provided by net income from land transfer and value-added revenue from housing reserve funds, accounting for 66.15%; 5.247 billion yuan were provided by local government finance at various levels, accounting for 11.70%; 3.214 billion yuan were raised through other channels, accounting for 7.16%. The incurred affordable security expenditure was 21.911 billion yuan; at the end of 2009, the accumulated balance was 27.797 billion yuan.

Audit shows that since 2007, under the leadership of the Central Committee of the Communist Party of China, the State Council and local party committees and governments, the 19 provinces and cities conscientiously implemented the requirements of the "Comments from the State Council on Resolving the Housing Problems of Low-income Urban Families" (Guofa〔2007〕No. 24) and increased investment in low-rent security funds; these provinces and cities formulated relevant regulatory documents, and made clear the objectives for subsidized low-rent housing ; they committed work responsibilities, giving an impetus to the rapid development of work on affordable housing. The affordable  housing security fund raised by these 19 provinces and cities increased from 8.861 billion yuan in 2007 to 64.226 billion yuan in 2009, an increase of 6.25 times; the total number of households thus subsidized increased from 690,300 to 2,469,300, an increase of 2.58 times; at the end of 2009, among the 32 key cities surveyed, in 27 cities the coverage of affordable housing security fund extended from families with housing problems receiving minimum living allowance, to low-income families with housing problems.

Relevant government departments attach great importance to the audit investigation and have given active support and cooperation; and it has already rectified the problems found in the audit. After the audit investigation ended, the Ministry of Housing and Urban-Rural Development and other departments incorporated the rectification of issues found into the contents of supervision work on subsidized comfortable housing project construction for 2010, forwarded the list of issues found to the districts audited; the Ministry carried out key supervision and handling of issues on the-site inspections, urged the localities to speed up rectification of issues reflected in the lists in accordance with relevant regulations; the Ministry and other departments attach great importance to the audit recommendations and have begun to study and improve relevant policies.

2.  Main Audit Findings and Their Rectification

(1) Several cities failed to collect in time the full amount of affordable housing security funds from the net income out of land transfer in accordance with regulations.

According to regulations, the proportion of affordable housing security funds collected from the net income out of land transfer shall not be less than 10%. However, in 22 cities including Beijing, Shanghai, Chongqing, Chengdu, etc., such proportion did not meet the requirement. From 2007 to 2009, the funds collected by these cities had a total shortfall of 14.623 billion yuan. The main reasons are: firstly, some economically developed cities had a larger land transfer net income base, the affordable housing security fund collected in prior years together with funds raised through other channels were sufficient to meet the needs of affordable housing security funds for a given period, and thus they arbitrarily reduced their collection ratio; secondly, some cities had not yet made accurate accounting of net income from land transfer, resulting in failure to collect affordable housing security funds or less than required.

After the issues were identified, as of the end of August 2010, except for Tianjin, which indicated that affordable housing security funds raised through other channels have met the requirements, the remaining 21 cities either increased efforts in collecting affordable housing construction funds in the same year, or promised in the future to implement the requirements in strict accordance with regulations to ensure that affordable housing security funds are fully in place. Eleven cities, including Beijing, Shanghai and others, also collected 3.861 billion yuan of net income from land transfer to make up for affordable housing security funds for previous years.

(2) Deviations in affordable housing security policy implementation in some localities.

Among 32 key cities surveyed, 18 cities distributed 4.1312 million yuan of low rent housing subsidies and 533 low rent houses to 2132 families which were not eligible; among the families receiving affordable housing security funds in the 22 cities sampled, 13,200 households failed to use the rent subsidies to improve housing conditions as required, but instead for other family consumption, so that rent subsidies have become “living allowances". The main reasons are: firstly, the verification and oversight mechanisms regarding the targets for security are inadequate, information on demographic changes, income, property, etc. are not yet being shared, the relevant departments do not have accurate and timely relevant information; secondly, in some localities the low-rent housing subsidy standards are too low, most targets that are eligible for subsidy still live in old city areas, for families relying on rent subsidy or affordable housing security funds, it is difficult to rent comfortable housing by relying on their own economic means.

After the issues were identified, as of the end of August 2010, 18 cities have stopped distributing rent subsidy to 1,569 non-eligible families who had received low rental housing rent subsidies, and recovered 864,700 yuan of affordable housing rent subsidy fund; of the 533 low rent houses distributed to non-eligible families, 107 suites have been cleared up and returned, and the remaining 426 suites are in the process of being returned. Five grass-root staff suspected of fraud and swindling low rent housing rent subsidy have either been dismissed or given major administrative sanctions or other punishments by the relevant units. Regarding the issue of rent subsidy for affordable low rent housing not being used for or not exclusively for improving housing conditions, the relevant local governments are actively exploring how to rectify the problems in terms of examination and verification process, form of distribution and follow-up supervision of rental subsidies. For example, Jinan City and Tai'an City plan to rectify the problems by taking measures to link the receipt of rent subsidy to actual housing rent expenditures; some districts in Haikou City and Shenzhen City have taken measures to correct the problems by providing subsidy only upon presentation of housing lease agreements.

(3) In some localities, support facilities are not adequate and working procedures not up to standard and other issues existing in affordable housing construction.

First, due to inadequate support facilities, remoteness of location, inconvenient transportation, etc. associated with low rent housing, in some localities in 13 cities including Nanjing and others, problems about allocating and leasing low rent housing exists, and housing resources remain idle; in some places where exist even cases of tenant families returning the houses they have already lived in.

Second, in 13 cities including Nanjing, Kunming and others, where 1.26 billion yuan have been invested in new construction, acquisition or renovation of affordable housing projects, there are problems of failure to strictly implement regulations regarding bidding and government procurement.

After the problems were identified, as of the end of August 2010, 11 cities including Leshan, Yancheng and others have taken measures to improve roads, transportation, and other support facilities, etc., and speed up the process of low rent housing allocation and lease, etc. so as to rectify the current situation; Xi'an city and Quanzhou city formulated plans to improve supporting facilities and speed up the rent housing allocation and lease work. As to the problem of failure to implement regulations over bidding and government procurement in new construction, acquisition or renovation of low rent housing projects, the cities concerned have all  strengthened the management over construction project bidding; among these cities, three cities including Nanjing, Shenzhen, and Yancheng held special meetings to arrange relevant work, and formulated normative documents.

(4) In some localities, after low rent houses were occupied, the problems cropped up in collecting rent and property management fees, and in non-eligible tenants returning the houses they have already lived in.


Among 32 key cities surveyed, as of the end of 2009, the cumulative arrears in affordable housing rent and property management fees amounted to 2.3805 million yuan in 12 cities including Tianjin, Shenyang, Chongqing and others; 20 districts and counties in 6 cities of Shenyang, Xiamen, Changde, Chengdu, Leshan and Kunming had problems about non-eligible families moving out of low rent housing. The main reasons are: firstly, lack of effective measures and clearly defined regulations regarding behavior in delinquent rental payment and refusal to return low rent houses; secondly, some families living in low rent houses, but once their income had changed and are no longer eligible for allocation of low rent houses in kind, most of them still are unable to purchase new homes, and indeed they have difficulty in vacating their existing low rent houses.

After the problems were identified, as of the end of August 2010, 7 cities including Chongqing, Guangzhou and others took measures to separate household billing, approaching each family to press for payment, etc., and to strengthen the efforts in home rent and property management fee collection; Chongqing, Pingliang and other localities took measures to solve the problem; they are required to pay in lieu of rent deduction or hiring of personnel within the community to do property service work, etc., and to a certain extent the difficulty in collecting rent and property management fees has eased.

(5) In some localities, there exist problems of illicit collection and misappropriation of low rent housing security funds.

Among 32 key cities surveyed, 6 cities and 4 counties used low-rent housing security funds for the repurchase of affordable housing and working expenses, etc., totaling 152.313 million yuan; 34 projects in 6 cities used false statements to withhold 61.29 million yuan of central government budget subsidy for investment in new low rent housing construction.

After the problems were identified, as of the end of August 2010, the 152.313 million yuan of misappropriated low-rent housing security funds have been returned, the problems of using false statements to withhold in part central government budget subsidy for investment in new low rent housing construction have all been rectified through readjustment of the projects or going through the necessary formalities again.

In addition, the audit also referred to the relevant departments clues to one criminal case; the relevant departments have placed the case on record and are investigating in accordance with law.