* Measures to help bring rising property
prices
down to reasonable levels..!
* Increasing the minimum down-payment for
second houses
* 20 % capital gains tax
* Limit Price Increase of New Houses..!
* Forbidding banks to extend loans to buyers of
3rd houses and beyond..
In an effort to rein in China’s soaring property prices,
China’s State Council released the “Circular on Effectively Regulating the Real
Estate Market (guobanfa [2013] No.17, hereinafter referred to as ‘Circular’)’
on March 1, 2013.
20% capital gains tax
The Circular has rolled out an array of property cooling
measures, including a 20% capital gains tax on property sales in cities where
housing prices are believed to be rising too quickly.
Outline some of the key measures adopted in Guangdong
Province, Beijing and Shanghai below.
Guangdong Province,,!
Guangdong became the first region in China to implement
such property control measures.
In a statement released by the Guangdong government on
March 25, 2013 all cities in the province are required to introduce their own
measures to help bring rising property prices down to reasonable levels,
specifically:
Areas where property prices are rising rapidly must
impose a 20% capital gains tax as required by the central government.
Four major cities in the province - Guangzhou,
Shenzhen, Foshan & Zhuhai - must continue to enforce curbs on house
purchases & alter property purchase restrictions that are not in accordance
with the new measures released by the central government.
Cities above the prefecture level shall establish a
mechanism that allows for the rapid approval of commercial housing projects for
apartments smaller than 90 square meters; meanwhile, the construction &
sale of small and medium-sized commercial housing projects shall be accelerated.
1,16,000 Affordable Houses..!
The province will basically complete the construction of
1,16,000 affordable and government-subsidized houses in 2013 and start
constructing another 78,400 at the same time.
Cities above the prefecture level shall include migrant
workers with stable employment who meet certain conditions in the housing
security project.
The statement also provides that officials who fail to
bring their cities’ property prices to reasonable levels this year (2013) will
be held accountable.
In response, both Shenzhen & Guangzhou issued
detailed regulations on March 31, 2013
Limit Price Increase of New Houses..!
According to the regulations, Guangzhou plans to limit
the price increase of new houses below the city’s per-capita disposable income
growth in 2013, and will adjust down payment requirements & interest rates
on loans for second house purchases.
Those families without Guangzhou hukou (permanent
household registration) are permitted to buy one home in the city if they,
within 2 years before buying a house in the city, have paid tax or / social insurance fees continuously in
Guangzhou for above 1 year.
The city also plans to keep its residential housing land
supply higher than the actual average annual supply in the last 5 years.
Shenzhen will also limit house price increases to the
growth rate of the city’s per-capita disposable income in 2013 and adjust
down-payment ratios and interest rates for second house purchases “when
necessary.”
Beijing..!
Beijing issued its own property curbing measures on March
30, 2013 which look to be the strictest rules in the country thus far. One of
the distinct features of Beijing’s regulations is that single adults with
Beijing hukou are banned from buying a second home in the city.
Under the previous rules, each family was allowed to own
two houses, which has led to a soaring number of fake divorces. In order to act
as separate owners, some couples divorce deliberately, so they can buy a second
home without having to adhere to tough rules such as higher mortgage rates and
down payment requirements. Limiting single adults to one house in the city is
expected to curb the “fake divorce” phenomenon.
Increase minimum down-payment for second homes..!
Key measures adopted by the Beijing government can be
found below.
Increasing the minimum down-payment for second houses
Forbidding single adults with Beijinghukou to buy a second house Implementing a
20% capital gains tax on property sellers.
Where the original value of the house can be verified
Stop issuing sales licenses for projects with prices that are much higher than
the average rate in the region.
Exempting the 20% capital gains tax for individuals
selling their only house which they have owned for 5 years or more Banning
individuals / entities who provide fabricated materials in order to buy
apartments from purchasing real estate in Beijing for 5 years Completing
construction of abour 70,000 affordable
flats in 2013
Shanghai..!
Shanghai released its own property control measures on
March 30, 2013 which aim to keep housing prices stable in 2013.
Key details have been summarized below:
Implementing a 20% capital gains tax on property sellers
where the original value of the house can be verified.
Imposing greater scrutiny on borrowers who are divorced
or come from other cities or / countries
Forbidding banks to extend loans to buyers of third
houses and beyond
Requiring financial institutions to adjust their
requirements for down-payment ratios and interest rates for second-home buyers
at an “appropriate” time
Requiring financial institutions, while extending loans,
to offer priority to commercial housing projects which have above 70% of their
units assigned for small and medium-sized houses
Completing the construction of nearly 10,000 affordable
houses in 2013
Guaranteeing the commercial housing land supply at a
level not lower than the actual average annual supply in the last 5 years
Outside of these key regions, second tier cities
including Chongqing, Nanjing, Xiamen, Ji’nan and Qingdao have also released
detailed regulations focusing on controlling housing prices in their respective
locations.
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