REITS Involved In The Construction Of Low-rent Housing

Low-rent housing construction is one of the measures to perfect home security system in China, inhibit housing prices is an important measure. The constructing and operating of low-rent housing are quite diferrent from them of commercial real-estate which determined by its characteristics of welfare housing. However, it is precisely because the existence of these characteristics that the development and operation of low-rent housing are facing new difficulties. Especially in low-rent housing development and construction financing channels, under the current sent to the financial hedge, mainly depend on financial allocations, net of social protection policy on financial support, but also hard to rely on commercial banks to solve the traditional finance products. And more flexible fiscal and financial systems support, or commercial operation has yet to be excavated. Due to single channel of funding, how to secure sufficient funds to meet the needs of low-rent housing construction becomes a major problem. Therefore, broadening financing channels for low-rent housing has a positive outcome for low-income earner and can reduce the government's fiscal burden. Article explores the REITS in the use of low-rent housing financing, combines international experience and analysis of the actual operation of low-rent housing programs on REITS and put forward specific action ideas and suggestionsIn addition to the introduction and conclusion, this article is divided into four parts. The first part is a description of the basic theory of REITS. The author first introduces the definition of REITS, and then its characteristics, elements, and international and domestic developments. Through a comparative analysis of corporate and Contractual REITS, the article proposes that the introduction of Contractual REITS in low-rent housing is necessary and important Second part highlights the introduction of REITS as a financing channel for domestic low-rent housing construction to resolve government funding issue. This part describes the overall plan in term of organizational forms, income pricing, investment, fundraising, size and scope respectively. Through characteristics analysis of REITS on low-rent housing projects, it it proposed that integrating government owned companies to form an asset pool and then issuing Contractual REITS through public offering would realizes investors'return while achieving low-rent housing construction funding.The third part of this article focuses on the risks of Contractual REITS facing investors. First, the Contractual REITS has all the general risks of REITS, including systematic risk and non-systematic risk, moral hazard and so on. Secondly, owing to the characteristics of Contractual REITS, the author analyzes the specific risks, the special characteristic of moral hazard risk. Thirdly, from the theoretical level, practice level and characteristic of Contractual REITS's perspective, the author analyzes the causes of these risks. Then on the legal and institutional basis, the author summarizes deficiencies in risk avoidance in China from three aspects, which are investor oversight, regulatory issues and fiduciary duty. Finally, the author proposes methods on how to protect the investors'interests associated with Contractual REITS.Fourth part, the author analyzes the difficulties of introduction the REITS to build low-rent housing through several aspects, such as laws and regulations, supporting measures, taxation and yield levels. The author proposes that the regulations should be introduced as soon as possible, including basic laws, taxation laws, etc.; that also the government should formulate related policies and supportive measures. So that the multi-pronged approaches can effectively remedy the problem of inadequate income; and fully used REITS on low-rent housing construction would be a new channel of financing.