Editor’s note: This article provides a round up of recent regulatory moves in mainland China, along with insights into the impact that these new measures may be having on the market. Mingtiandi introduces this new element of the site today, and we hope that you will enjoy reading our new editions each week.
Beijing Developers Defy Ban on Sales of Homes in Commercial Buildings
Although the Beijing municipal government has banned sales of commercial space for residential purposes since 2017, a report in the official People’s Daily found instances of developers using shell companies and other tactics to sell the illicit form of budget housing.
A separate investigation by local news site The Paper found that homes created in commercial titled buildings, which carry land use durations of only 40 to 50 years, have reappeared in the market, although sales volumes are still down 93 percent compared to the period before the ban two years ago. Read more>>
Hainan Waives Home Purchase Restrictions for Non-Resident Professionals
In what has become a popular tactic for expanding the pool of eligible home buyers in a city, Hainan last month relaxed house purchase restrictions for qualified professionals who have migrated to the island province.
Subject to review by local authorities, qualified returnees to Hainan, as well as employees of recognised regional or global headquarters offices on the island, may now qualify to buy a single home on the island, according to an account in The Paper.
China’s southernmost province had imposed strict policies to control home purchases since prices spiked there early last year including requiring would-be homebuyers in the cities of Haikou, Sanya or Qionghai not yet holding “hukou” local residence permits to have paid local tax or social security for sixty consecutive months before making a purchase. Read more>>
Fuzhou Launches Crackdown on Dodgy Brokers, Leasing Loans
The Fujian provincial capital of Fuzhou is declaring war on dodgy property brokers, including the targetting promotion of loan agreements tied to residential leases, according to an account in The Paper, after China’s long-term apartment bubble has sparked a surge in questionable market practices and accompanying consumer complaints.
Fuzhou authorities are kicking off inspections of property brokerages in the city on April 5th, looking for unlicensed or unregistered brokerages, as well as hunting down agencies colluding with financial institutions to market the now notorious “rental loans” to unsuspecting tenants.
Fuzhou officials vow to refer any offenders to the criminal justice system for further investigation, according to a government announcement. Read more>>
Former Tax Official Calls Out China’s One-Size-Fits-All Housing Policies
At a conference on March 29th, Xu Shanda, former deputy commissioner of China’s State Taxation Administration, criticised the government’s current practice of applying the same home purchase restrictions nationwide, saying that that the approach treats the nation of 1.3 billion people as a single housing market, according to local media reports.
Xu said China’s first and second-tier cities are all undersupplied with housing, and that there is no need for policies to limit purchases of homes in these core urban hubs. The retired official called for more homes to be built in the top tier cities while applying policies aimed at reducing inventories only in third and fourth-tier cities. Read more>>
VAT Rate on Construction Cut to 9% as China Loosens Tax Policy
China’s Ministry of Housing and Urban-Rural Development (MOHURD) reduced taxes on construction at the end of March as part of a nationwide reform of tax policies by the central government.
In a move that some analysts see as aimed at encouraging real estate investment, the ministry announced that it had reduced the value-added tax (VAT) rate on construction expenditures by one percentage point from 10 percent to 9 percent. Read more>>
State Council Aims to Reduce Property Registration Time to 10 Days
In a move tied to China’s long-touted property tax, China’s State Council has vowed to cut the time required to register a new home by a third, according to a press briefing from the official cabinet-level body.
The nationwide property ownership database, which China began establishing as the infrastructure of its eventual property tax system, now requires an average of 15 days to register a new home, with it taking seven days to declare a mortgage. The State Council has now set a target of achieving 10 day property registrations and five day mortgage enrollment by the end of 2019. Read more>>