Recently, the China Securities Regulatory Commission ("CSRC") and the Ministry of Housing and Urban-rural Development ("MOHURD") have jointly issued the Circular on Promoting the Asset-backed Securitization of House Leasing (the "Circular").
The Circular outlines basic conditions for the asset-back securitization (ABS) of house leasing business, one of which reads "the property runs normally and generates continuous and stable cash flow". Further, it is made clear in the Circular that priority support will be given to the ABS of house leasing projects carried out in core areas supported by state policies, such as large- and medium-sized cities and Xiongan New Area, and in cities where the pilot program to use collective construction land to build houses for leasing purposes. In addition, the Circular standardizes procedures for applying for the ABS of house leasing, accepting and examining these applications and issuing the ABS products, and it also optimizes formalities concerning the completion acceptance, record-filing and transactions of rental-oriented residential houses involved in the securitization of house rental business. Furthermore, the Circular calls for tightening supervision and administration of house leasing securitization and sets out concrete requirements in respect of reasonably valuating the property used for house leasing business and intensifying intermediary agencies' and initiators' responsibilities.