Can the shared area of commercial housing be cancelled? Industry insiders: It's impossible to achieve it overnight

Recently, a news that "canceling public housing stalls is deceiving homebuyers not to receive benefits" has made the area of public housing stalls the focus of public opinion once again.

In recent years, news such as "buying a 100 square meter house only costs 70 square meters" and "the strongest public housing community in history" have been constantly emerging.

The discussion among the public about the shared area has never ceased, with different opinions. Supporters believe that public sharing is unreasonable and strongly call for its cancellation; Opponents believe that regardless of the sales method used, the shared area will not be given away in vain, and the top priority is to standardize the management of shared area.

The public has many criticisms about the shared area

In July of this year, Ms. Ji from Xi'an, Shaanxi Province, stated that she had purchased a 69 square meter commercial apartment with a shared area of 37 square meters, accounting for over 50% of the total area. The shared area was so large that she doubted her life.

Once the incident was reported, it once again sparked public discussion about the shared area. A netizen said, "The developer is well intentioned. The apartment is too small, and if guests come, they can't sit down in the hallway." "It can even snatch money directly, but it just gives you 32 square meters as charity."

The shared area, which has caused a lot of resentment among homebuyers, refers to the abbreviation of the shared public building area, which, together with the interior building area, constitutes the building area of a commercial housing unit.

"In judicial practice, it is generally believed that the shared public building area includes elevator shafts, pipeline shafts, stairwells, garbage lanes, transformer rooms, equipment rooms, public lobbies, corridors, basements, duty guard rooms, etc., as well as the building area for the entire service and management building, calculated based on the horizontal projection area. The shared building area also includes the partition wall between the suite and the public building, as well as the building area of the outer wall with half the horizontal projection area." Zhang Renzang, a member of the legal expert database of the "Rule of Law Daily" and senior partner of Beijing Yingke Law Firm, told reporters.

"Firstly, on a per unit basis, the design unit calculates the total shared area of the entire building through drawings, and then distributes it to each household in proportion to the building area within the unit. Generally, after the project is completed, the surveying and mapping department also needs to calculate the property area again." Architectural engineer Bai Yan, who has rich experience in surveying and mapping and housing budget auditing, introduced the process of calculating the shared area to the reporter.

However, in the process of purchasing a house, buyers are often confused by terms such as "shared", "shared coefficient", and "shared rate".

As early as 2010, a pre-sale real estate project in Gaomi, Shandong Province was known as the "strongest public sharing" community in history due to its "sharing coefficient" reaching 52%; In 2018, Mr. Jiang from Wuhan, Hubei Province purchased a "commercial and residential house", but after paying the money and receiving the contract, he found that it was a "commercial office house" with over 40% of the shares shared, while the developer promised a rough shared leisure area; In 2022, homeowners in a residential area in Qingdao, Shandong Province discovered that the shared area accounted for as much as 46% of the total area after purchasing a house... However, when they received the house, they found that the area had been shared among the public, causing many homebuyers to feel like they were "at a great loss" and "being trapped".

Many netizens expressed their support for canceling the shared living area, saying that the hard-earned money has been shared among the public and suffered a great loss, and that the value of use is not so high. Why should we charge a unit price equivalent to the actual living area; But some homebuyers and industry insiders have also expressed that after canceling the shared area, developers will inevitably increase the unit price of the property, and the total price of the house is likely to be almost the same.

Therefore, netizens used a vivid analogy: is durian sold with a shell or without a shell?

There are no clear laws and regulations in China yet

Recently, when Ms. Ji asked for an explanation for over 50% of the shared area, the salesperson stated that the shared area is not a problem and complies with national regulations. The local housing and construction bureau also stated that there is currently no explicit regulation on the proportion of shared area.

Zhang Renzang told reporters that there are no direct and clear provisions in Chinese law regarding the calculation method of shared area. The regulations on shared area are currently mainly found in local regulations, departmental rules, and normative documents.

He further pointed out, based on his experience in judicial practice, that due to the lack of clear regulations on shared area and no restrictions on the proportion of shared area in China, disputes are prone to arise. Judges usually compare the shared area data stated in the real estate registration certificate, commercial housing sales contract, and the developer's application for construction provided by the housing management bureau in the location of the house, in order to determine whether the calculation of the shared area of the house is incorrect. In practice, if a homebuyer requests to terminate the contract on the grounds of unclear agreement on the shared area or excessive shared area, the court usually does not support it.

"What areas are shared and how much is shared are all shrouded in confusion, and developers can only speak up casually, while the people bear high costs for it." During the 2022 National People's Congress and Chinese People's Political Consultative Conference, Hong Yang, a member of the National Committee of the Chinese People's Political Consultative Conference, stated that adding shared areas to the sales of commercial housing is a common phenomenon throughout the country. The most frightening thing is the lack of legal basis and institutional constraints on the shared area.

He found some drawbacks in the process of performing his duties, including the lack of professional institutions to measure the shared area of each household under the supervision of the owner or third-party professional institutions, and the lack of owners to measure the shared area of their own houses clearly, while the owner bears high costs for the shared area; There is no unified standard for the division of shared area, which can only be decided by the developer the final say; Unreasonable charging of residential property fees based on building area.

Faced with these issues, regions such as Guangzhou and Chongqing have explored using the usable area within the unit as the pricing basis and no longer sharing the shared building area among households. Hong Kong has issued new residential property regulations, completely abolishing shared area.

In August of this year, Hefei held a special meeting on real estate work throughout the city, proposing measures such as actively exploring the pricing of commercial housing sales based on the unit area, which attracted widespread attention. Among them, the most concerning content from the outside world is "to avoid a large proportion of shared area and actively explore the pricing of commercial housing sales based on the unit area", that is, to explore the cancellation of shared area. It is understood that this is the first time Hefei has publicly proposed to "explore the pricing of commercial housing sales based on the area inside the unit".

At the legislative level, in February 2019, the Ministry of Housing and Urban Rural Development issued a notice for public solicitation of opinions on the "Residential Project Specification", which stated that "residential buildings should be traded based on the usable area within the housing unit." However, when the "Residential Project Specification" was subsequently solicited for public opinion, this expression was no longer present.

On March 1, 2023, the Ministry of Housing and Urban Rural Development officially implemented the "General Code for Civil Buildings", which stipulates that "the building area should be calculated based on the horizontal projection area of the outer surface of the enclosure structure at each natural floor of the building.". After its release, this regulation sparked heated public opinion and was interpreted by the outside world as "an increase in shared area.". But later, the Ministry of Housing and Urban Rural Development stated that this statement was a misreading.

Improving the system of shared area has more practical significance

In recent years, there have been many discussions in the industry regarding the cancellation of public sharing. The cancellation of shared area has been repeatedly mentioned during the National People's Congress and Chinese People's Political Consultative Conference in recent years.

As early as 2011, Lin Yi, a member of the National People's Congress, suggested the cancellation of shared area; In 2016, 10 representatives including Liu Shulin, a member of the National People's Congress, suggested that the whole country should buy and sell houses based on the "built-up area within the unit"; Zhou Shihong, a member of the National Committee of the Chinese People's Political Consultative Conference and Vice President of the Anhui Lawyers Association, called for the use of the interior building area as the basis for pricing the sale of commercial housing in 2019 and 2021; In 2022, Hong Yang, a member of the National Committee of the Chinese People's Political Consultative Conference, also proposed to cancel the shared area of commercial housing and calculate the actual cost of shared area into the actual usable area.

Zhang Renzang stated that canceling the system of shared area is feasible. The cases and experiences of Singapore, Japan, and Hong Kong in China to abolish the shared area system indicate that reducing or canceling shared area can help improve market efficiency, protect consumer rights, and promote the healthy development of the real estate market. The cancellation of the shared area system allows homebuyers to choose houses that are more flexible and suitable for their needs, without being limited by fixed area. It also helps to eliminate unreasonable competition in the market and the phenomenon of inflated housing prices. Developers will pay more attention to the quality and functionality of housing, improve product competitiveness, and promote the transition of the market towards high-quality housing supply.

However, in the eyes of many industry insiders, canceling the shared area cannot be achieved overnight and may even affect the rights of homebuyers.

Lou Jianbo, director of the Real Estate Law Research Center at Peking University, told reporters that the common parts of buildings themselves objectively exist. If they are not shared equally among owners, they can only be held by developers. Homebuyers may not be willing to keep the common parts in the hands of developers. However, including the shared area in the total priced area can indeed cause confusion for homebuyers.

"The problems caused by public sharing cannot be simply solved by canceling public sharing. The key is to achieve transparency and transparency in the sales safety process, fully guarantee the right of homebuyers to know, and do a good job in disclosing the standards and details of public sharing area." Lou Jianbo suggests that in the early stage of promotion and formal sales of houses, buyers should be clearly informed of the relevant area data in the predicted or measured report of the house area. The way and content of such notification and information disclosure should be meaningful and understandable to homebuyers, disclosed to the public, and the details of the shared income should be exposed to the sun.

Zhang Renzang suggested that in the case where the "shared area" is inevitable in the short term, the first step is to improve the data disclosure mechanism, requiring developers to disclose the calculation method of the shared area to homebuyers and protect their right to know. The relevant departments should further standardize the system of shared area, stipulate the maximum proportion, charging standards, measurement methods, etc. of shared area, to avoid disputes over purchasing due to the issue of shared area.

He further pointed out that for developers who arbitrarily expand the shared area beyond reasonable error, they can consider applying the punitive compensation liability in the Consumer Rights Protection Law, requiring them to compensate the buyer three times the cost of shared area, thereby increasing the cost of violation and curbing the phenomenon of "disorderly sharing".