Over 3 Days, 3 Cities Shutdown Commercial Purchases of Homes; A First in China

Perhaps partially related to the Chinese guy in Hangzhou who bought 5 houses through shell companies. Also related to the government's inability to fully curb speculative behavior. Maybe this will finally be the straw that breaks the camels back. Along with the end of PSL lending for shantytown renovation, China's working hard to restrict a major source of GDP growth.

Xinhua: 三天三城暂停企业买住房 更多城市或跟进
The property market has seen new trends in its regulation and control, and it is directed at companies buying homes.

  On June 24th, Xi’an announced that it would suspend the purchase of houses by enterprises and institutions in the restricted purchase area. This is the first case in the country. Following the footsteps of Xi'an, Changsha and Hangzhou quickly released similar policies on the 25th and 26th.

Three days and three cities, control pace is quite compact.

Xi'an requested that the sale of housing (including commodity housing and existing housing) to enterprises, institutions, and other institutions be suspended within the scope of the home purchase restriction.

  Changsha stipulates that the purchase qualification review of commodity housing (including newly-built commodity housing and second-hand housing) be further strengthened. Suspension of the purchase of commodity housing within the restricted purchase area by the enterprise, and the purchased commodity housing may be transferred only after it has obtained the certificate of immovable property for 5 years.

  Hangzhou proposed to suspend the sale of housing (including commodity housing and second-hand housing) to enterprises, institutions, and other institutions within the area of ​​housing purchase restrictions, and requested the municipal housing and housing management department to further study and improve relevant policies.

  Judging from the previous policy of restricting purchases by cities, most of them are targeted at individuals or families, and there are few restrictions on buying houses in the name of companies.
So, why should companies suspend their businesses for housing this time?

  Officials everywhere say this:

  "Prevent the speculation of real estate speculation in the name of a company." The person in charge of the Xi'an Housing Authority said.

  Wang Weisheng, director of the Changsha City Housing and Construction Commission, said that the main contradiction in the current regulation and control of the property market in Changsha is not the contradiction between supply and demand, but the contradiction between real estate speculation and real estate speculation. He stressed that we must “resolutely curb speculation and real estate to ensure rigid purchase demand.”

  The official WeChat public account of the Hangzhou Municipal Bureau of Housing and Housing Insurance issued a statement on the suspension of the purchase of housing by enterprises and public institutions. “The fact that the three companies had won the counterfeit number in the process of public sales of the Jiuchai’s Cangxiang project has caused a large number of Internet users. attention."

  Some netizens commented, "I don't even know that companies can buy homes."

  What exactly are some companies doing real estate speculation?

  "Real estate speculators borrow the 'company' shell to operate has long been an open secret, not limited to the impact of limited purchases and restrictions." 58 Bo Habitat Research Institute chief analyst Zhang Bo said in an interview with the China New Network reporter.

  Zhang Bo said that there are two main ways to speculate in the name of the company:

  One is to buy and sell real estate in the name of a company to make a difference. In most cases, this method will be adopted, but it will involve higher transaction taxes.

  The other way is to trade real estate by direct transfer of the company, usually in larger luxury homes, in a one-time transaction with multiple properties, or in such a way.

  “Especially in the city where the ban has been sold, the proportion of companies purchasing homes has continued to increase.” Zhang Dawei, chief analyst of Centaline Real Estate explained that the restrictions on the sale time of individual home buyers are limited by the increase in transaction taxes even when companies buy a home. However, during the restricted sales period, no transfer of ownership is allowed. It is entirely possible to use disguised forms of equity transactions in disguise to bypass regulatory policies and reduce some transaction taxes.
Industry analysts said that in the future it is expected that there will be more cities in the regulation to fill this loophole.

  At present, Changsha requires that “purchased commercial housing must be acquired after obtaining a certificate of immovable property for 5 years.” Hangzhou should further study and improve relevant policies.

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