What is financing land?

1. Land financing is one of the business models of the financial industry. Its essence is to use land as credit collateral to obtain funds to maintain business. It has become an international financial model.

Second, financing land sales is not equal to land sales.

Land financing originated from 1998. The "Regulations on the Implementation of the Land Administration Law of the People's Republic of China" gives local governments the right to sell land, so that local governments can obtain land transfer fees, land taxes and other income by selling land, and use it as policy support for local financial resources.

Under the background that local fiscal revenue can't meet the rapid urbanization and new land management policies, local government land financing came into being.

Extended data

Internal financing methods include:

(1) Enterprise's own funds: including funds invested by investors when the enterprise is established, surplus reserve fund drawn from after-tax profits after a period of operation, and capital reserve fund (mainly formed by accepting donations, capital exchange rate conversion difference, equity premium, etc.). ) and other capital controlled by the enterprise itself and held for a long time.

Self-owned funds are the foundation and guarantee of enterprise management, and the state has strict requirements on the proportion of self-owned funds of real estate enterprises. Developers are generally reluctant to use too much of the company's own funds. Only when the profitability of the project is considerable and certain, it is possible to appropriately invest the company's own funds.

(2) Accounts received in advance: refers to the deposit received by the developer from the buyer in advance according to the contract, and the development and construction funds received by the entrusted development unit in advance according to the contract agreed by both parties. For developers, the necessary development funds can be raised in advance in this way. Among them, advance payment mainly refers to the personal mortgage loan of buyers, which is an important source of development funds for real estate enterprises in China.

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