China issued new rules on Sep 7 to curb overinvestment by raising fees and taxes on land sales and doubling the compensation that must be paid to original occupants.
The move is the latest attempt by the government to slow development in the property sector, which is at risk of overheating, and to control the rapid pace of investment-driven economic growth.
It is said that the fees and taxes will be "drastically" raised.
Developers and local governments who want to acquire land from farmers or urban dwellers will have to pay double the current rate of compensation to them.
This will benefit tens of thousands of rural and urban Chinese families that annually lose their farmland and homes to mushrooming development projects.
One analyst said the move could work if it is well-implemented, as controlling land use was the key to controlling economic investment.
"Land is definitely one of the major tools that the government relies on to slow the economy," said Chen Xingdong, a China economist for BNP Paribas Peregrine.
"Land usage has to be much stricter and the government will try to make local governments benefit far less from developing land and reduce the incentive for local governments to raise funds by selling land."
Taxes from land sales will be shared with the central government and will not be pocketed just by the local government.
This year, the government took other measures to prevent a bubble in the overheated real estate market, including two interest rate hikes and curbs on banking lending to property developers.
In July, the government also issued rules that made it tougher for overseas investors to invest in the property market.
Under the regulations, capital requirements for overseas individuals or firms will be raised while they will also have to have been in China for at least one year before they can buy property.
In recent years, the rising value of land has spurred local governments to force farmers off their land so they can sell it to commercial developers for huge profits.
Land seizures have led to some of the biggest protests and riots in China as a result.
Source:佚名