According to the regulations, historical houses in these villages can be acquired from the original inhabitants by the government or State-owned enterprises and then turned over to private investors for either renovation or repurchase.
The regulations state that this system will better protect the houses and allow them to be turned into small enterprises, such as tourist attractions, to raise money for their continual upkeep.
With more than 17 nationally and provincially authorized "ancient villages", Suzhou was, in 2005, one of the first cities in China to open the door to private capital to protect its historical sites. The city government said private investment can make up any financial shortfall to help preserve the ancient villages.
A total of 150 million yuan ($23.5 million) has been spent by the local government on renovation and infrastructure works to preserve the ancient villages over the past seven years.
Ancient villages are defined as one or a cluster of hamlets that feature at least 10 characteristic residences, temples or other forms of architecture, and were formed before 1911.
"The new policy is definitely good news for the villages," said Xu Gangyi, a retired member of the Suzhou government think tank on historical relic protection.
"This capital, if used well, can bring a new life to the dying houses," he said. "But the main (conservation) body must still be the government so as to prevent the villages from becoming overly commercial."
The protection of ancient villages has been a nationwide problem. Feng Jicai, chairman of the Chinese Folk Literature and Art Society has warned that 300 villages in China are dying every day because of urbanization. A total of 900,000 villages were destroyed over the past decade, and a large number of them were ancient villages.
Xu believes the reason behind such "vast extinction" is the lack of attention, both from the government and those "cashed-up people".
"Of course, we accept the new policy with open arms," said Yu Feng, vice-chairman of the Collectors' Association of Yiwu, Zhejiang province.