Visitors look at a model of a housing project at a real property exhibition in Beijing.
China will prohibit property developers, real estate agencies as well as internet finance and micro-loan companies from offering illicit down payment financing for buyers, as the government seeks to rein in overheated property prices in major cities.
Using funds obtained through channels, such as consumer loans for property purchases, will also be banned, according to the Ministry of Housing and Urban-Rural Development.
The ministry said it would work with the central bank and banking regulator to act against money laundering in the property market.
Institutions that are found to break the rules will be punished, according to the regulator.
It also requires banks to scrutinize funding sources of downpayments and the authenticity of income certificates.
The measures came as soaring property prices have made housing affordability a growing problem for policy makers. Since last year, dozens of local governments have passed or expanded restrictions on house purchases and increased minimum downpayments.
Chinese authorities have constantly reiterated that "houses are built for living in, not speculation."
At a press conference on the sidelines of the 19th National Congress of the Communist Party of China, Wang Menghui, minister of housing and urban-rural development, said authorities were studying a "long-term mechanism" for real estate regulation and advancing legislative work on developing the rental market.
He pledged to move faster to "implement a housing system that ensures supply through multiple sources, provides housing support through multiple channels, and encourages both housing purchase and renting."