A total of 2,132 families in 18 cities across the country, who have benefited from the governments' low-rent housing policies from 2007 to 2009, have been found to be too rich to qualify for the projects designed for the underprivileged, a latest audit report showed.

The families enjoyed 533 low-rent houses and received 4.13 million yuan (US$622,000) of government low-rent housing subsidies during the period, the National Audit Office (NAO) said on its website on Wednesday, without naming the cities involved.

Auditors also found that 13,200 families in the 22 cities had used the government low-rent housing subsidies as living allowances, instead of for improving their housing conditions, the report said.

The report was based on two audits carried out by the NAO in 2009 and 2010 on the operation of low-rent housing projects between 2007 and 2009 in 32 cities in 19 provinces and municipalities, including Beijing, Shanghai, Heilongjiang, and Sichuan.

To cope with the pressure of increasing housing prices on urban residents with low income, governments across the country in recent years have significantly increased the supply of subsidized land, low-rent housing and affordable homes.

The audit report showed that the funds for low-rent housing projects allocated by the 19 provincial and municipal governments had sharply increased from 8.86 billion yuan in 2007 to 64.2 billion yuan in 2009. A total of 2.47 million families benefited in 2009, or 2.58 times the number in 2007.

However, more financial irregularities were revealed in the same period. A total of 213.6 million yuan for low-rent housing projects had been misappropriated or used improperly, the report said.

And 22 of the 32 cities, including Beijing, Shanghai, Chongqing and Chengdu, had failed to allocate 14.6 billion yuan from their land-leasing profits to support the low-rent housing projects, the report said.

The central government has required local governments to allocate 10 percent of their net profit from land leasing to supply low-rent housing.

The report also said that after the audit the local governments found to have had irregularities have corrected their mistakes by taking back the housing and subsidies offered to unqualified families. It said all the misappropriated and misused money had been returned.

Li Chang'an, a public policy professor at the University of International Business and Economics, said the report shows that it is obvious that some local governments drag their feet when building low-rent housing, as it cannot generate much income.

"The central government should strengthen supervision of such projects, including construction and quality," he said.

"Also, more preferential policies, as in tax revenue and land leasing, should be given to developers to encourage them to build affordable apartments," Li said.

(China Daily November 18, 2010)