Beijing will refrain from building and selling new low-cost residences because of public controversy created when the residences were purchased only to be sold later for profit, a senior official of the city's housing commission said on Thursday.

The low-cost residences, which have been a major source of affordable housing for middle and low wage earners, will be replaced by additional public rental housing - dwellings that can be rented but not individually owned - according to Zou Jingsong, an official with the Beijing Municipal Commission of Housing and Urban-Rural Development.

"Over the next five years the government will mainly build three types of housing: public rentals, subsidized owner-occupied homes and houses accommodating people displaced by the government's demolition of dilapidated buildings," Zou said.

Subsidies for owner-occupied homes are part of an arrangement championed by the government since 2013. The homes are 30 percent cheaper than comparable homes on the open market.

The elimination of affordable home sales comes after years of criticism that such houses acted as a vehicle for a sort of arbitrage. Houses were purchased only to be sold later at a hefty profit. Owners of such houses could sell them five years after purchase.

The first batch of such homes in the Tiantongyuan area, for example, were purchased for less than 2,000 yuan ($308) per square meter 15 years ago but now are worth at least 20,000 yuan per sq m.

The lax application process, especially in the early years, allowed many well-off families to purchase apartments of more than 100 sq m per unit and then resell them to make a fortune. Well-known economist Mao Yushi lambasted the practice as the country's largest corruption case.

According to the commission, Beijing made good on its promise to provide 1 million units of all kinds for people with low incomes between 2011 and 2015. More than 400,000 families who registered and waited for public houses got them.

The commission did not specify how many units it would provide during the coming five-year period, 2016-20. But Zou said the government will ramp up construction of public rental homes, and will ease conditions so that more people will be allowed to apply.

Currently, only people with Beijing household registration permits who have low annual incomes and who own no other homes can register as candidates for public housing. Many families waited many years and underwent multiple lottery rounds to get a home, due to the short supply.

In 2015, 49,000 units of subsidized homes were sold to owner-occupants. One in six candidates eventually got one.

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