Investing And Financing Public Rental Housing Through PPP

Increasing the supply of public rental housing is focus of China’s housing securitypolicy during the12th5-Year Plan time period. It will not only play an important role insolving the housing problems emerged during the stage of rapid urbanization, but helpimprove housing security system and build a socialist harmonious society as well.However, as a matter of fact, the construction progress is relatively slow, mainlybecause of low return on investing public rental housing and difficulty in fund raising.Therefore, for the purpose of making the progress of construction and operation ofpublic rental housing run smoothly, it’s necessary to carry on in-depth analysis of theinvestment and financing problems and to design reasonable mechanisms, which hasgreat value in improving the system of public rental housing and promoting theconstruction of affordable housing projects.After reviewing the investment and financing policies and their implementation ofpublic rental housing, identifying the existing problems and summing its characteristics,the thesis firstly discussed the necessity and feasibility of introducing the PPP mode intothe development of public rental housing and the issue of selecting the specific patternthe private sector could participate in within the framework of the PPP model. Secondly,under the selected BOT model, the thesis designed some important mechanism, such asthe role and position of both sides, risk-sharing and benefit-sharing mechanism and soon. Thirdly, based on some basic principles such as protection, fairness and sustainabledevelopment, the thesis took an in-depth study and designed the mechanism of pricingpublic rental housing and encouraging the private sector to do a better job. Finally,relative policy proposals were put forward based on the research results of the entirethesis.Study results indicate that the Build-Operation-Transfer model is the ideal modeldue to match each other better, considering the features of public rental housinginvestment and financing. Under the BOT model, the government is essentially thepurchaser of public service, but still bears the responsibility of supplying public rentalhousing, which means it should try hard to improve relevant policies and to tightensupervision over its private partners. The private sector is the provider of public service,which means it could seek their profits without any prejudice to the benefits of public rental housing’s guarantee objects. When it comes to the rent standard of public rentalhousing, a ‘double-rent’ system should be taken, within which the rent paid by thelessee and the subsidy from the government is separated. Besides, pricing and designingthe term of franchise should take into account the time value of money and benegotiated within reasonable limits between the government and the private sector afterthey weigh up the pros and cons. In addition, the government should take necessarymeasures to encourage private sector’s participation in the development of public rentalhousing through the BOT model. The key of the incentive measures is to directly orindirectly guarantee the proceeds of the private sector with the help of the financialcapital, and to improve the low-cost financing availability for the private sector througha certain mechanism.The thesis raised an innovative model of public rental investment and financing,and carried on an in-depth study on the core issues, such as pricing principles andspecific mechanisms, based on which some policy proposals were put forward. Thestudy provides a theoretical basis for improving China’s housing security system and animportant reference for the practice of public rental housing.