China clarifies rules for insurance funds to invest in long-term home rentals

BEIJING — China's insurance regulator has standardized investments by insurance funds in long-term home rental projects.

Insurance funds can invest in long-term rental projects based in large and medium-sized cities and areas that see net population inflows, such as Beijing, Shanghai, and Xiongan New Area in Hebei province, the China Banking and Insurance Regulatory Commission said in an online statement.

The new rules, effective from May 28, broaden investment channels for insurance funds and help with real estate controls, the statement said.

Insurance funds can invest in such projects in both equity and debt. For debt investment, cash flow of the entities being invested should cover at least the amount of principle and interest of their debt payable.

For equity investments, insurance funds should not use the equity of the target projects as collateral to a third party.

Registration of insurance asset investments in long-term home rental projects will be fast-tracked, the statement said.

In an attempt to stabilize home prices and curb speculation, pro-rental policies include support for a real estate investment trust (REIT), a means of property asset securitization that help developers to raise funds.