On March 9, the General Office of the Ministry of Natural Resources issued a notice requiring the "Technical Specifications for Land Price Assessment in the Transfer of State-Owned Construction Land Use Rights" (hereinafter referred to as the "Specifications") to take effect from April 9. What is the background behind the issuance of these "Specifications"? Compared with the "Provisional Specifications for Land Price Assessment in the Transfer of State-Owned Construction Land Use Rights," implemented since 2013, in what aspects have the "Specifications" been revised and improved? What specific requirements do the "Specifications" set forth for land price assessment in the transfer of state-owned construction land use rights? To address these questions, our reporter interviewed the head of the Department of Land Use at the Ministry.

　　Reporter: What is land-use right transfer price assessment? Why is it necessary to establish separate regulations for land-use right transfer price assessment?

　　Responsible Party: Article 10 of the “Regulations on the Bidding, Auction, and Listing for the Transfer of State-Owned Land Use Rights” requires that the administrative departments of land and resources at the municipal and county levels shall, based on the results of land valuation and government industrial policies, comprehensively determine the reserve price or starting price. Article 11 of the “Regulations on the Agreement-Based Transfer of State-Owned Land Use Rights” stipulates that the administrative departments of land and resources at the municipal and county levels shall conduct a land price assessment for plots intended for transfer; after collective decision-making by the administrative departments of land and resources under the municipal and county people’s governments, a reasonable starting price for agreement-based transfers shall be determined. Article 18 of the “Urban Real Estate Management Law” provides that if a land user wishes to change the intended use of land as stipulated in the land use right transfer contract, they must obtain the consent of both the transferor and the planning administrative department of the municipal or county people’s government, sign an amendment agreement to the land use right transfer contract, or re-enter into a new land use right transfer contract, with corresponding adjustments made to the land use right transfer fee. It is readily apparent that land price assessments for transfer purposes are conducted—in accordance with applicable laws, regulations, and relevant national policies—on plots designated for bidding, auction, listing, or agreement-based transfer, as well as on plots whose planning conditions are adjusted following transfer. The purpose of these assessments is to provide a reference basis for determining the starting price for transfer or for setting, verifying, and confirming any additional land payment that may be required.

　　Considering the following issues, it is necessary to issue separate technical specifications for the assessment of land transfer prices. First, since the results of land transfer price assessments may directly affect land transfer revenues and determine whether state-owned land assets are lost, such assessments are even more critical than general parcel-based land price assessments and thus require careful handling. Second, compared with general parcel-based assessments, land transfer price assessments come in a variety of types and are more specialized and complex, involving numerous technical factors that need to be taken into account. Therefore, it is essential to clearly define these aspects through separate technical specifications. Third, prior to the issuance of the 2013 “Specifications (Trial),” the existing technical regulations were overly general and lacked clarity in terms of specific technical approaches, leaving too much room for discretionary judgment during the land transfer price assessment process. This, in turn, created ample opportunities for rent-seeking behavior and posed significant risks of corruption and loss of state-owned land assets at the local level.

　　Reporter: Could you briefly introduce the drafting process of the “Guidelines”?

　　Responsible Party: In accordance with the administrative function of “formulating technical standards for land valuation,” the Department of Land Use under the Ministry of Natural Resources, together with the China Association of Land Appraisers, initiated relevant research and feasibility studies in 2011. Building on preliminary surveys, the Department of Land Use drafted a preliminary version in October 2012. The draft was widely circulated to solicit feedback from all experts on the Technical Review Committee of the China Association of Land Appraisers, provincial-level departments of natural resources, selected municipal and county-level departments of natural resources, land appraisal institutions, and various divisions and bureaus within the Ministry itself. Subsequently, four specialized seminars were held, culminating in the formulation of the “Standard (Trial)” version, which came into effect on April 8, 2013. Over the five years since the implementation of the “Standard (Trial),” it has achieved positive and remarkable results and has received widespread acclaim from all sectors of society.

　　First, the valuation practices for land transfer prices have been swiftly standardized, providing appraisers with clear technical guidelines. Second, this has helped to promote a more orderly land market, effectively curbing the practice of arbitrarily adjusting development and construction conditions after land is transferred. Third, it has significantly reduced the risk of loss of state-owned land assets and strengthened the integrity safeguards in the land-transfer sector. During the implementation period, the Department’s Land Use Management Division, together with the China Association of Real Estate Appraisers, continuously collected feedback from various regions. In 2017, the Department initiated revision work, collaborating with the China Association of Real Estate Appraisers to conduct surveys and widely solicit opinions from local land appraisal institutions on the draft “Standard (Trial).” The Department also sent letters to provincial-level land and resources authorities nationwide, requesting their input on the revisions. Based on the survey results and feedback received from different regions, the “Standard (Trial)” was revised and finalized into the “Standard.” After being reviewed at a special departmental meeting, the “Standard” was officially released.

　　Reporter: What is the guiding principle behind this revision of the regulations? What are the specific revisions?

　　Responsible party: First, this revision adheres to the principles of maintaining a normal land price formation mechanism and ensuring market fairness. Second, it aims for stability; given the implementation results, the “Guidelines (Trial)” are generally scientific and feasible. To ensure continuity of work, we will avoid making major revisions. Third, the revision keeps pace with the times. It fully takes into account the actual developments and changes in the land market over recent years, as well as new directions in land use management, reflecting a revision approach that promotes the revitalization of existing underutilized land, increases the supply of land for rental housing, and encourages diversified land supply entities.

　　The main revisions cover the following aspects:

　　First, standardize the wording. Further refine the phrasing to ensure consistency between policy language and current relevant regulations. Use terminology and specialized vocabulary that are consistent with the “Urban Land Valuation Procedures” issued in 2014. Update the technical standards version and incorporate requirements from newly promulgated laws, regulations, and policies.

　　Second, clarify the commissioning party. In some localities, the local land and resources departments still require land-use right holders to commission appraisals, leading to situations where the commissioning party interferes with the appraisal results. Therefore, the “acceptance of commission” in the appraisal procedure will be explicitly defined as “acceptance of commission from the competent department of natural resources (or the transferor).”

　　Third, we are introducing a new assessment category—“agreed proportion of rental residential area at the time of transfer”—and explicitly stipulating that market rental rates will serve as a key basis for calculation, thereby demonstrating support for land designated for rental housing.

　　Fourth, further clarify the valuation date. The phrase “when the land and resources authority approves the supplementary payment of land premium” should be revised to “when the land and resources authority legally accepts the application for supplementary payment of land premium,” making the wording more precise.

　　Fifth, the policy reflects support for revitalizing existing land and promoting the release of its potential. Regarding the payment of additional land premiums when modifying utilization conditions such as floor area ratios for existing land, the original regulation stipulated that the highest value among three calculation methods should be adopted; this has now been revised to use only the standard market price method. A new provision has been added stating that “if the floor area ratio remains below 1 both before and after the adjustment, the land price per floor area shall be calculated based on a floor area ratio of 1,” thereby facilitating the reuse of inefficient land whose floor area ratio remains below 1 even after adjustments. Additionally, a new provision has been introduced: “For industrial land undergoing a change in intended use, the additional land premium payable shall equal the new-use floor area price multiplied by the new-use building area, minus the current industrial land price.” The previous provisions related to development costs have been removed, clearly emphasizing the value of existing conditions on industrial land and encouraging the reuse of underutilized industrial sites.

　　Sixth, standardize the assessment approach for simultaneously adjusting multiple land-use conditions. Clearly stipulate that the increases and decreases in land prices resulting from each individual condition adjustment should be calculated separately, and the total amount of additional land fees to be paid should be computed by combining these adjustments. This will address the common misunderstanding in local implementation—where each condition is calculated individually, leading to the perception that land prices only increase but never decrease.

　　In addition, to encourage local initiative and avoid ambiguity, the relevant wording on “three-old” renovation has been removed, and the requirements of the “Asset Valuation Law” have been duly implemented.

　　Reporter: Could you please explain the relationship between the “Standard” and the “Regulations on Urban Land Valuation”? And how should the old and new standards be seamlessly integrated?

　　Responsible party: From a technical perspective, the “Standard” represents an enhancement and refinement of the “Regulations on Urban Land Valuation.” In accordance with the requirements of the “Asset Valuation Law,” the “Standard” and the “Regulations on Urban Land Valuation” both belong to the fundamental technical guidelines for land valuation and constitute the highest technical standards that professional land appraisers must adhere to. From an implementation standpoint, given the relationship between specific and general provisions, in the field of land price assessment for land transfer, when encountering conflicting provisions, the “Standard” shall take precedence over the “Regulations on Urban Land Valuation.”

　　The “Standard” shall come into effect officially as of April 9, 2018. For applications received before April 9 but for which land valuation reports have not yet been issued, the “Standard” may be applied. Once a land valuation report has been issued, no further adjustments will be made. Whether a land valuation report has been issued can be determined comprehensively by examining institutional archives, administrative department archives, and the land valuation report filing system.