Single-person households cannot buy second home, minimum down payment raised for buyers
Bloomberg 31 March 2013
Beijing - The city of Beijing has banned single-person households from buying more than one residence and increased the minimum down payment for all buyers of second homes.
The new measures take effect today, according to the official Xinhua news agency, which said the city will also enforce a 20 per cent tax on capital gains from property.
Prices in Beijing jumped 5.9 per cent from a year earlier last month, the biggest increase since February 2011, China’s National Bureau of Statistics said on March 18.
Prices across the country rose 160 per cent from 1998 to 2011 after ownership passed into private hands, government data shows.
The new measures “will help to calm people’s panic about home prices,” said Mr Yi Xianrong, a Beijing-based researcher at the Chinese Academy of Social Sciences, which advises the Cabinet.
“At the same time, restrictions on home purchases don’t change the fundamental demand, and it seems the new measures in Beijing are aimed more at short-term problems rather than the long-term healthy development of the property market.”
Beijing, a city of about 20 million residents and a magnet for migrants from other provinces, has been implementing other rules, including banning residents from buying more than two homes.
The city government of Shanghai, where new home prices last month rose 3.4 per cent from a year earlier, also issued a notice saying the city will increase down payment requirements and interest rates for second-home mortgages, while strictly prohibiting banks from providing credit to third-home buyers.
Observers say the new measures in Beijing and Shanghai constitute a response to a swelling tide of couples rushing to divorce to evade the ongoing crackdown on property speculation.
Current rules allow each household with a Beijing residence permit to buy a second home, opening the way for couples to divorce on paper to double their ability to invest.
The authorities are seeking to plug a loophole that allows couples with two properties who divorce, and put each house in one person’s name, to then sell them tax-free under certain conditions, after which they can remarry.
Government marriage registration offices - which also handle divorces - in the commercial hub of Shanghai have been swamped by scores of couples trying to untie the knot, including at least one pregnant woman, the state-backed Shanghai Daily has reported.
“She told me she came here to avoid the possible loss in a property transaction, and I could say nothing,” it quoted a harried official at one registry as saying.
“I told all of them to come here again for remarriage registration,” he told the newspaper.
The registry in Changning district, another district of Shanghai, said its divorce figure soared nearly 30 per cent.
Shanghai’s Civil Affairs Bureau confirmed the 20 per cent capital gains tax had triggered a rise in the number of divorces, but it declined to give a total for cases across the city.
The new measures come a month after former premier Wen Jiabao, during his last days in office, ordered the central bank to raise down payment requirements for second mortgages in cities with excessive price gains and told local governments with the biggest price pressures to tighten home-purchase limits.
China has “very serious” property market bubbles in some regions, said Dr Xiang Songzuo, chief economist of the Agricultural Bank of China.
China’s property curbs have seen “very limited” results as these measures are focusing on limiting demand while China should instead focus on boosting supply, he said.
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Curbs on 2nd home purchases in Beijing
Single-person households cannot buy second home, minimum down payment raised for buyers
Bloomberg
31 March 2013
Beijing - The city of Beijing has banned single-person households from buying more than one residence and increased the minimum down payment for all buyers of second homes.
The new measures take effect today, according to the official Xinhua news agency, which said the city will also enforce a 20 per cent tax on capital gains from property.
Prices in Beijing jumped 5.9 per cent from a year earlier last month, the biggest increase since February 2011, China’s National Bureau of Statistics said on March 18.
Prices across the country rose 160 per cent from 1998 to 2011 after ownership passed into private hands, government data shows.
The new measures “will help to calm people’s panic about home prices,” said Mr Yi Xianrong, a Beijing-based researcher at the Chinese Academy of Social Sciences, which advises the Cabinet.
“At the same time, restrictions on home purchases don’t change the fundamental demand, and it seems the new measures in Beijing are aimed more at short-term problems rather than the long-term healthy development of the property market.”
Beijing, a city of about 20 million residents and a magnet for migrants from other provinces, has been implementing other rules, including banning residents from buying more than two homes.
The city government of Shanghai, where new home prices last month rose 3.4 per cent from a year earlier, also issued a notice saying the city will increase down payment requirements and interest rates for second-home mortgages, while strictly prohibiting banks from providing credit to third-home buyers.
Observers say the new measures in Beijing and Shanghai constitute a response to a swelling tide of couples rushing to divorce to evade the ongoing crackdown on property speculation.
Current rules allow each household with a Beijing residence permit to buy a second home, opening the way for couples to divorce on paper to double their ability to invest.
The authorities are seeking to plug a loophole that allows couples with two properties who divorce, and put each house in one person’s name, to then sell them tax-free under certain conditions, after which they can remarry.
Government marriage registration offices - which also handle divorces - in the commercial hub of Shanghai have been swamped by scores of couples trying to untie the knot, including at least one pregnant woman, the state-backed Shanghai Daily has reported.
“She told me she came here to avoid the possible loss in a property transaction, and I could say nothing,” it quoted a harried official at one registry as saying.
“I told all of them to come here again for remarriage registration,” he told the newspaper.
The registry in Changning district, another district of Shanghai, said its divorce figure soared nearly 30 per cent.
Shanghai’s Civil Affairs Bureau confirmed the 20 per cent capital gains tax had triggered a rise in the number of divorces, but it declined to give a total for cases across the city.
The new measures come a month after former premier Wen Jiabao, during his last days in office, ordered the central bank to raise down payment requirements for second mortgages in cities with excessive price gains and told local governments with the biggest price pressures to tighten home-purchase limits.
China has “very serious” property market bubbles in some regions, said Dr Xiang Songzuo, chief economist of the Agricultural Bank of China.
China’s property curbs have seen “very limited” results as these measures are focusing on limiting demand while China should instead focus on boosting supply, he said.
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