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Finding, Buying and Renting for Expats in China

Author: Jim Newham
Submitted: August 2013

Finding Property

Property is easiest to find in the biggest cities. Beijing and Shanghai offer the greatest variety of accommodation, though their property can be very most expensive. You could look for property on your own initiative, but most people use estate agents. If you have the help of a Chinese-speaking friend, that could be invaluable here. Most of the available accommodation is in the form of flats.

Though more is becoming available, accommodation is quite limited in many cities, so it is important to be organised. Most accommodation in smaller towns is basic. In larger cities you will find accommodation ranging from ludicrously expensive Westernised apartment blocks to standard apartments, which vary greatly in quality and size, many being rather cramped.

Renting

As most stays in China are short-term, far more expats rent accommodation than buy it in China. Rented accommodation is often provided by employers, so there may be no need to rent separately. Note that, in the northern cities, there is district central heating; the heating is centrally-controlled and is turned on and off at a certain date.

The initial outlay for renting is quite costly. Once you have decided to rent a particular place, you must pay a holding deposit of one month’s rent, which is non-refundable. You must then pay, in addition to your first month’s rent, a security deposit of two or three months. So you will need a total of four or five month’s rent worth of money as an initial payment. Further expenses may be payable. Rent prices do not normally include bills, and you may be charged a property management fee. The normal rental period is twelve months, after which you can choose to extend.

Buying property

Although foreigners who have lived in China for at least a year are now permitted to buy their own property, the process of buying is generally becoming more difficult. You are only allowed to buy one house, and you are obliged to live in it – there is no ‘buy to let.’ Furthermore, the PRC government, in another measure taken to avoid a property bubble occurring, has forbidden banks from lending to any non-nationals. This means that you will probably find it impossible to secure a mortgage at present. Hence, unless you have all the cash available upfront, or have a Chinese national as a partner, you are not going to be able to buy property in China.

Note that the standard procedure is to lease properties for 70 years. The lessor is the PRC Government, as the State effectively owns all property. If the Government wants to use the land for new building work, it has the power to make compulsory repurchases. This is especially true of older properties that are not under a freehold lease. The compulsory purchase will probably not be at full market price.

If you have managed to overcome these hurdles and have found somewhere you like within your price range, the purchase procedure is not particularly onerous. The first step is to send an official offer letter to the vendor, setting out the purchase price agreed by both parties. If the vendor accepts the offer, you need to pay a 1% deposit straight away. At this point, your estate agent, or lawyer if you have one, will make checks on the property, and on the vendor if necessary. Checking the structure of the property, particularly older buildings, is important, as Chinese building practices were rather slipshod in the recent past. Note that, to buy some properties, you may need to obtain government or Public Security Bureau approval at this point.

Next you need to enter into an official sales contract with the vendor, and pay a 30% deposit. After this, the vendor must pay off any existing mortgage on the property and request the deed transfer from the government. This can be a lengthy process, taking weeks. In the meantime you will need to pay deed tax, which is at a rate of 3% to 5%. Then, when this is done, the government issues you with a new ownership certificate. Provided you can pay the vendor the remaining 70% of the purchase price, the place is yours.

 

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