The China Banking and Insurance Regulatory Commission published rules governing insurance companies' investments into long-term rental housing.
When investing into long-term rental housing, Chinese insurers can invest either directly or through their asset management institutions in the form of debt investment plans, equity investment plans, asset-backed plans or private equity funds.
The CBIRC said June 1 that if an insurance asset management company uses debt investment plans to invest in long-term rental housing, the financing body should ensure the debt principal and interest are covered by its own funds. If an insurance asset manager uses equity investment plans or private equity funds to investment in companies with rental home projects as their core assets, the equity of the target companies should not be used as a third-party pledge.
The regulator said insurers' investments in long-term rental housing should be in Beijing, Shanghai, Xiongan New Area in Hebei province and other large and midsize pilot cities that have seen net population inflow. These investment projects should generate economic and social benefits as well as stable cash flow.
The regulator added that insurers should take their asset-liability, solvency and liquidity conditions into consideration when making investments in long-term rental housing.
The CBIRC said the rules will broaden available channels for the deployment of insurance funds and optimize asset allocation, while accelerating supply-side reform in China's real estate market.
The Chinese government has been encouraging the development of rental apartments since late 2016 to increase new housing supply in big cities and curb overheated home prices.
