March 31, 2016 — Recently, China’s central and local governments introduced new real estate policies to cool demand in Tier 1 cities (Beijing, Guangzhou, Shanghai and Shenzhen) and stimulate demand elsewhere.
Here is a summary of the new real estate policies:
- The minimum down payment for first-time home buyers outside Tier 1 cities was reduced from 25% to 20%.
- For houses larger than 90 square meters, the deed tax was reduced from 2% to 1.5% for first-time buyers nationwide. For second home purchases, the deed tax fell to 1% for dwellings under 90 square meters and 2% for those over 90 square meters. Homes in Beijing, Guangzhou, Shanghai and Shenzhen will continue to be taxed at 3%, regardless of size.
- Sales of homes outside Tier 1 cities that are held for more than two years are now exempt from business tax.
- The central government stopped releasing land for development in cities that have a glut of unsold property and increased the interest rate for deposits in the housing provident fund.
- The central government prohibited local governments from borrowing money from banks for land purchases.
- The central government announced that it would ban construction of new gated communities and open existing ones to the public.
- Shanghai raised the minimum down payment for second homes over 144 square meters or costing more than RMB4.5 million to 70%. Nonlocal buyers must now have been employed in Shanghai for five years to qualify for home ownership.
- Shenzhen increased the minimum down payment for second homes to 40% and required nonresident buyers to have made social security payments for three years.
- Zhuhai, which is adjacent to Macau, lifted all restrictions on nonresidents buying homes.
In the months ahead, local and central governments are expected to make further changes. You can stay abreast of these changes by subscribing to The Landed Newsletter. To learn how to buy apartments and houses in China, see Landed China.
Note: This post was originally published on March 6, 2016, and updated on March 31, 2016.