A Study On The Aggregation Of The Public Rental Houses Supply And The Rental Pricing Principle Based On The Hongshan Model

The outline of the "Twelfth Five-Year Plan" proposed an Affordable Housing Project and planed construction of36million indemnificatory house units. But since2011, the year the project is proposed; it has faced constraints in the supply of land and capital. There have been many problems while the project is put in to effect in several major cities. The construction process is slow, the construction capital is difficult to raise and there are cases that the quality of the house is poor and substandard. Meanwhile, the from-top-to-bottom distribution procedure leads to situations like the supply and demand do not match. It is reported that there is a high vacancy rate in the public houses in Zhengzhou and Shanghai. There are multiple reasons that cause the situation, among which I believe the following two are most significant:a) the stock houses in the market are not fully utilized; b) the rental pricing policy is not suited for the fact situation.Compared to constructing a big amount of new houses for the public housing project, there are obvious advantages in utilizing the social stock houses in the market. It’s faster and the use of the land and capital is more effective. Hence, we have very good reasons to explore the utilization of stock houses as public houses.This paper first introduces the practice model in the public housing project in the Hongshan district, Wuhan, known as Hongshan model hereafter in this paper. I discussed the background, the basic characteristic of the Hongshan model, which is making the decisions based on actual situation, utilizing the redundant houses in the urban village reconstruction project and introducing that into the public housing project. The Hongshan model innovates in the raising of public houses, finds a new way and creates a new model for financing public housing--the monetary rent.Then, based on the optimization theory, a pricing model for the public houses is proposed, suitable for both stock houses and new-constructed houses. The model takes into account several major factors in the public housing system:the financial capability of the government, the willingness of social institutes to participating in the operation of the public rental houses, the affordability of the tenants and the social welfare. The parameters in this model can be adjusted to balance the interests of all parties, making the public housing model a sustainable one.Finally, some problems of the Hongshan model are discussed and improvement advices and directions for future research are outlined, in order to extend the Hongshan model to other urban village reconstruction projects and provide valuable research reference in utilizing the stock houses as public rental houses in other cities.