There are two common modes of urban renewal: "agreed joint construction" and "right transfer". In both cases, the implementer assists the landowner in rebuilding the house. After the reconstruction is completed, the implementer can allocate part of the land for sale to cover the construction development costs and obtain reasonable profits.
After the house is rebuilt, the number of square meters that can be allocated back to the implementer will be deducted, and the remaining area will be distributed back to the landlord. As for how to determine the proportion of area that should be allocated among the various owners, it will vary depending on the "agreement to jointly build" or "right transfer".
Zhongtai Real Estate Appraisers Joint Office stated that "right conversion" refers to converting the value of the original land and buildings through a professional real estate appraiser to evaluate the rights value ratio of the parties involved in the right conversion and calculating a reasonable shared burden ratio, and then convert the pre-update value into the post-update total sales amount, and provide a fair and reasonable basis for distribution.
Through the method of rights conversion, the original landowners in areas with higher housing prices do not need to invest funds, but are borne by the implementers, and the original landowners can allocate the updated housing according to the rights value ratio before the update. For landowners who cannot afford high reconstruction costs, rights conversion is highly attractive.
Implementers can create higher post-renewal value by integrating land, applying for volume incentives and capital investment, and earn reasonable profits through shared burdens. For the government, through urban renewal, old buildings can be improved, city appearance and urban disaster prevention capabilities can be improved, and it can also drive local economic and tax revenue growth.
Zhongtai said that the rights transformation is to create a win-win system through the input of the landowner, the implementer, and the government. It not only allows the original landowner to retain the assets and improve the living environment, but also allows the implementer and the government to achieve their own development and policy goals. The rights transformation system is an important method to achieve win-win and urban regeneration with the help of real estate appraisers to provide reasonable and fair distribution basis.
So what is the difference between "rights transformation" and "joint construction by agreement"? Zhongtai stated that according to the definition of Article 3, Paragraph 7 of the "Urban Renewal Ordinance", rights conversion refers to the land owner, legal building owner, other right holder, implementer or person who has agreed to invest with the implementer in the redevelopment section to provide land, buildings, other rights or funds to participate in or implement the urban renewal project. After the implementation of the urban renewal project plan is completed, the updated land, buildings or royalties will be distributed according to the ratio of their pre-update rights value and the amount of funds provided. The transformation of rights can only be implemented with the consent of the majority of rights holders.
Joint construction by agreement is a cooperation between the landowner and the construction company. It is a private contract type. Therefore, there are no regulations on the distribution of the value ratio. It only requires the consent of both parties. Therefore, if joint construction by agreement is adopted, the consent of all rights holders is required before it can be implemented.
As for "who" can participate in the distribution of rights conversion value? According to Article 2 of the "Implementation Measures for Urban Renewal Rights Transformation", the so-called "rights transfer related parties" refer to the legal building owners, surface rights holders, permanent tenants, agricultural education rights holders and farmland 375 lease lessees who handle the transfer of rights in accordance with Article 60 of the "Urban Renewal Regulations".
Decoration and additions affect the changing value of rights
Zhongtai reminds that according to the current regulations, additional construction cannot be counted as the value of the rights. However, if the additional construction complies with the principles of land improvement treatment, its value or the value of the building can be compensated in accordance with Article 57 of the Urban Renewal Ordinance.
In addition, it should be noted that urban renewal is for the purpose of demolition and reconstruction, and focuses on the fairness of the value of the rights conversion among owners in the updated unit. Therefore, the evaluation is mostly based on the statutory purpose and general normal decoration conditions of the building. Therefore, decoration factors should not be included in the calculation of the rights conversion value.
And how do the most important evaluators emerge? According to Article 50 of the Urban Renewal Regulations, the appraiser shall be jointly designated by the implementer and the land owner; if joint designation is not possible, the implementer shall designate one, and the remaining two shall be selected by the implementer in an open and random manner from the lists recommended by the competent authorities at all levels.
Zhongtai stated that the valuation of rights conversion is the result of multiple reviews and reviews by the rights conversion group and the Urban Renewal and Dispute Resolution Review Committee. Therefore, the valuation reports have been strictly reviewed. In practice, in order to reduce the joint burden ratio, most implementers will select the highest total price of the land before the renewal and the total price of the real estate after the renewal as the basis.
As for "agreed joint construction", it belongs to the category of private rights contracts, which is exempt from government review and retains greater flexibility. As long as the implementer and the local owners negotiate well, they can allocate according to the proportions agreed upon by themselves. However, the distribution conditions for joint construction by agreement are diverse, and the scope of rights guaranteed by the joint construction contract such as rent subsidies, moving expenses, residual value of the building, tax exemptions and sharing, etc. are all different. It is recommended that participants pay more attention to their own rights.
