Some netizens are calling for tougher penalties after hundreds of applicants for low-income housing in this South China city used fake documents to cover up their wealth.

Notices have been sent to 290 applicants who used falsified documents to qualify for low-income housing in Shenzhen, Guangdong province.

They face fines of up to 5,000 yuan (US$770) and are not allowed to apply for government-subsidized housing for three years.

"It's not funny when you figure out the application list should only involve poor people, while some local rich guys are on it," said Shenzhen native Liu Yuan on Weibo.com, a popular micro blog.

"A 5,000-yuan penalty is just too light to be a deterrent."

According to the criteria, only families with less than 320,000 yuan in household wealth and who do not own any property can qualify.

However, local media reported that disqualified residents, even some well-paid government employees, cheated on their applications.

Pan Xiayun from Shenzhen's housing and construction bureau confirmed that 290 administrative penalty warnings have been issued.

Local media said 12 families had already received penalties.

This is not the first time Shenzhen's government-subsidized housing program has caught public attention.

In March, dozens of luxury vehicles such as Mercedes Benz and BMW were spotted in a parking lot at a low-income housing complex in the city. Some applicants were also said to have property in a community where apartments were sold for 20,000 yuan for one square meter.

A harsher punishment requiring a 100,000-yuan fine and lifetime disqualification for government-subsidized apartments was proposed in April. However, Huang Hongchang from the city's housing and construction bureau said the new rule is still in the process of approval.

The proposed rule would double the penalty to 200,000 yuan if the fraud was discovered after the applicants successfully obtained the house.