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Ensuring Delivery of Pre-sold Homes: Custody Reform, Financing Tools, Homebuyer Remedy

Integrity labels: OFFICIAL POLICY / MONITORING DATA / EXTERNAL PERSPECTIVE / CURRENT FCM GOVERNING ALTERNATIVE

Policy question

When developers’ debt crises left large numbers of pre-sold homes unfinished, homebuyers who had already paid deposits and were servicing mortgages faced the prospect of paying for homes that might never be delivered. The July 28, 2022 Politburo meeting that set the 保交楼 — “ensure delivery of buildings” — direction was widely reported in state and official coverage, and a sequence of financial and regulatory instruments followed. The governance issue is whether state financing and project-level coordination can convert unfinished projects into delivered homes, and whether the underlying mechanism that created the risk — pre-sale funds that homebuyers pay but developers can divert — is fixed rather than patched.

What the policy gets right

The response correctly diagnosed that the bottleneck was project-level liquidity, not just developer-level balance sheets. The 2022 suite of measures included the creation of a dedicated special loan facility for ensuring delivery and a joint 16-measure notice from the People’s Bank of China and the banking regulator on financial support for the property market’s stable development (Document No. 254 [2022]), which extended development-loan and trust-loan forbearance and prioritized lending for projects where construction had stalled. The centerpiece of the 2024 phase was the city-level real-estate financing coordination mechanism launched in late January 2024: city governments nominate eligible projects to a “white list,” and banks are required to review them promptly and lend where projects are commercially viable — matching specific projects to specific financing rather than extending general balance-sheet support to distressed developers. By October 2024 the authorities announced the white-list loan scale would exceed 4 trillion yuan by year-end, with all qualifying project loans brought under white-list management. That the mechanism explicitly channels funds to projects rather than to corporate treasuries is the right structural instinct, and it directly addresses the complaint that earlier support rescued developers without finishing homes.

The August 2026 sales-system reform moves further in the same structural direction. Requiring projects to reach structural topping-out before presale approval, delaying presale-home mortgage issuance until completion and filing, and using a lead-bank model with project-level separate accounting and closed fund management all reduce the role of buyer money as an unsecured source of construction finance. These measures target the diversion risk identified below, although their effectiveness still depends on implementation and enforcement.

What the evidence shows

The Ministry of Housing and Urban-Rural Development reported that by the end of February 2024, more than 200 billion yuan in loans had been approved under the white-list mechanism for about 6,000 projects across 276 cities. At the October 17, 2024 joint press conference, housing minister Ni Hong reported that 2.46 million homes had been delivered under the ensure-delivery campaign. These are official throughput figures and they describe real construction completions; whether they represent a decisive turn in the market remains an interpretive question given the scale of outstanding stalled projects, for which no single official national figure has been published.

The root mechanism — pre-sale fund custody — remains the policy’s acknowledged weak point. The summer 2022 mortgage-boycott episodes, in which buyers in multiple cities threatened or stopped mortgage payments on unfinished projects, demonstrated that escrow and supervision rules for pre-sale funds existed on paper but were inconsistently enforced: in some cases funds were withdrawn from supervised accounts before construction milestones were met. These episodes are documented by widespread contemporaneous reporting, but they are not a representative national survey of stalled-project buyers; they are evidence of a real custody-and-enforcement failure that the financing tools alone do not structurally resolve. As long as the pre-sale system lets developers hold buyer money ahead of delivery, the governance question is escrow discipline — who controls the funds, at what construction milestones they are released, and what penalty follows diversion.

August 2026 sales-system reform

On August 28, 2026, central authorities announced a structural reform of the commercial-housing sales system. Reuters reported that new projects would have to complete main structural topping-out before applying for presale approval and that completed-home sales would be prioritized. Parallel financing measures from the People’s Bank of China and the National Financial Regulatory Administration introduced a lead bank for each project, project-level separate accounting and closed fund management, brought development lending under the white-list framework, and moved issuance of personal mortgages for presale homes to after completion and filing. Reported implementation details also included a maximum mortgage term increase from 30 to 40 years, project-loan terms of up to five years for presale projects and seven years for completed-home-sale projects, and local implementation in Beijing in September 2026. The reported document number 建房规[2026]3号 and some local implementation details remain based on secondary reporting and should not be treated as independently verified official-text details.

Early market indicators should be treated cautiously. Caixin reported that land transactions across 70 major cities fell 36% in the week after the directive; other external assessments reported that presales accounted for about 68% of 2025 new-home sales by floor area, projected a roughly 30% decline in 2026 land-sale revenue, and cited an IMF staff estimate that completing presold projects of troubled developers could cost about 5% of GDP over three years. These are external assessments, not official outcome measures. The reform addresses future delivery risk; the legacy stock of unfinished projects remains a separate balance-sheet and completion problem, and it is too early to claim the delivery-risk problem has been solved.

Historical FCM record

No contemporaneous FCM position on the 2022–2024 ensure-delivery (保交楼/保交房) policies has yet been verified. The following recommendations are a current governance proposal and are not backdated.

FCM governing alternative

A Third Republic framework would keep project-level financing coordination while making homebuyer money structurally safe:

  1. Milestone-locked escrow by law. Require by statute that all pre-sale proceeds enter third-party escrow accounts releasable only against independently verified construction milestones, with criminal liability for diversion — replacing the current patchwork of local supervision rules that proved evadable.
  2. Public project-level transparency. Publish a live, project-level registry of stalled and at-risk pre-sale developments — construction status, funds drawn, scheduled delivery — so buyers and journalists can verify progress without depending on developer announcements.
  3. Homebuyer remedy before developer rescue. Codify a statutory right for buyers of projects stalled beyond a defined period to pause mortgage payments without credit-record penalty, or to exit the contract with deposit restitution, removing the need for boycott-style collective action as the only remedy.
  4. Independent construction audits for white-list lending. Require that white-list loans be disbursed against verified milestone completion by independent quantity-survey auditors, with the audit trail published, so that delivery financing cannot be repurposed for corporate liquidity.

How to measure success

  • Number of stalled pre-sale projects with verified construction restart, by city, published quarterly from the project registry.
  • Homes delivered to buyers per year under the ensure-delivery campaign, with independently audited completion certificates.
  • Escrow compliance audits: share of pre-sale accounts with verified milestone-based disbursement, and number of diversion cases prosecuted.
  • Average time from project stall to buyer remedy (restart, refund, or delivery) and the share of buyers using statutory remedies vs. protest action.
  • White-list loan disbursement rates (approved vs. actually drawn) and the share directed to milestone-verified construction spending.
  • Share of newly launched projects using topping-out presales versus completed-home sales, reported by city.
  • Loan disbursement under the new lead-bank and closed-fund model, including project-level use-of-funds compliance.
  • Impact of the sales-system reform on land-transfer revenue and local-government fiscal health, tracked alongside the local-government debt and fiscal-transparency dossier.

Sources

Related Governance sections: Policy Scorecard & Outcomes; Third Republic Governance Blueprints; Policy Papers & Governing Alternatives; Local Government Accountability.

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