China Overhauls Housing Provident Fund in Major Reform
China has proposed the most significant overhaul of its Housing Provident Fund (HPF) system in years, with a revised draft of the management regulations expanding withdrawal options, extending coverage to gig economy workers, and introducing tougher penalties for fraud. The Ministry of Housing and Urban-Rural Development (MOHURD) released the revised draft for public comment on June 5, with feedback accepted until July 5, 2026, as reported by Xinhua News.
Context: A System Built for a Different Era
Established in 1991 in Shanghai and modeled after Singapore’s Central Provident Fund, China’s HPF system was designed as a mandatory savings scheme where employers and employees contribute a percentage of salary into dedicated accounts for housing purposes. The system has undergone only two previous revisions — in 2002 and 2019 — since its formal national implementation in 1999. As the Economic Daily noted, “the current real estate market supply-demand relationship has undergone major changes, putting forward new requirements for the operation of the housing provident fund system.”
Key Changes: From 6 to 9 Withdrawal Scenarios
The most consequential change expands permissible withdrawal scenarios from six to nine categories. Three new scenarios have been added: renovation of self-occupied housing up to a specified limit, payment of property management fees for self-occupied housing, and other housing consumption situations approved by the State Council. The revised draft also lowers the threshold for rent extraction by removing the condition that rent must exceed a specified proportion of household income — now simplified to simply “paying rent,” according to the Legal Daily report.
Wu Jing, Director of the Real Estate Research Center at Tsinghua University, told Legal Daily that the revised draft “extends extraction purposes to renovation and property fee payment — the ‘home maintenance’ stage — responding to the changes in housing consumption scenarios of the vast number of depositors.”
Gig Economy Workers Brought Into the Fold
For the first time at the national level, the revised regulations allow self-employed individuals, part-time workers, and other flexible employment personnel to voluntarily participate in the HPF system. Specific implementation measures will be formulated by city-level governments. Yan Yuejin, Vice President of Shanghai E-House Real Estate Research Institute, described this as a landmark shift, noting that “this revision elevates the participation of flexible employment workers in the housing provident fund system from local exploration to a national institutional arrangement.”
Several cities had already begun experimenting with expanded HPF access before the national revision. Xiamen allows HPF withdrawal for home renovation at 1,800 yuan per square meter, while cities including Yichang, Jinan, and Liuzhou have fully opened HPF participation to flexible employment workers.
Faster Approvals and Digitalization
The revised draft shortens the loan approval timeline from 15 days to 10 days from the date of application. It also strengthens digital capacity building and promotes mutual recognition and mutual lending across regions — a critical improvement for China’s highly mobile workforce.
New Anti-Fraud Measures
A significant addition is Article 42, which introduces a tiered punishment system for fraud. Fraudulent extraction results in a three-year ban on extraction and loans, while fraudulent loans carry a five-year ban plus a fine of 10 to 20 percent of the loan amount, with possible inclusion on a serious dishonesty list. Wu Xuelian, Senior Partner at Beijing DHH Law Firm, told Legal Daily that the revision “fills the gap in higher-level legislation, providing unified and clear enforcement basis for national housing provident fund management institutions.”
Analysis: Why This Reform Matters Now
The reform comes at a critical juncture for China’s housing market. The real estate sector has shifted from rapid expansion to a phase focused on quality improvement and stock optimization. Demographic shifts, including an aging population and the rapid growth of platform-based employment, require more flexible housing support mechanisms. Homeowners face rising costs for renovation, maintenance, and property management — expenses the old system did not adequately cover.
The revised draft, comprising seven chapters and 52 articles, is expected to stimulate the home renovation market, reduce financial burdens on homeowners, increase housing affordability for renters, and expand the HPF system’s contribution base.
What’s Next
The public comment period closes on July 5, 2026. After incorporating feedback, the State Council is expected to issue the final regulations, though no specific timeline has been announced. Key questions remain, including the specific limits on renovation withdrawals and property fee payments, how different cities will implement the flexible employment worker provisions, and whether expanded withdrawal options will affect the HPF system’s long-term financial sustainability.