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China Property

Three Shanghai salesmen confess to taking US$765,000 in property bidding bribes

The agents were telling buyers that all the units at the site they were promoting were sold, while accepting backhanders privately from bidders

PUBLISHED : Tuesday, 05 September, 2017, 2:28pm
UPDATED : Tuesday, 05 September, 2017, 10:54pm

Shanghai police have arrested three real estate salesmen who confessed to accepted bribes totalling 5 million yuan (US$765,000), by holding back supplies of new flats for favoured bidders, in the latest example of a nationwide clampdown by the government on property malpractices to curb the overheated market.

The three, including a sales director representing a residential project in Fengxian District, Shanghai confessed to telling buyers all the units at the site they were promoting were sold, while extorted 100,000 to 200,000 yuan (US$15,300-30,600) from individuals privately in exchange for accepting their offers, China’s state-run CCTV reported, without naming the project.

New home prices in Shanghai have soared 45 per cent in the past year, one of the fastest growing cities in China, but they have flattened out in recent months amid administrative measures to keep prices in check.

“Charging additional fees [such as this] is illegal, but it reflects the scarcity of new supply in the city, creating arbitrage room for some property sales staff,” said Yan Yuejin, research director at the Shanghai-based E-house China.

Policymakers in more than 60 Chinese cities have imposed restrictions on buyers, selling prices and mortgage loans since late 2016 in an effort to fend off a housing bubble.

Charging additional fees [such as this] is illegal, but it also reflects the scarcity of new supply in the city, creating arbitrage room for some property sales staff
Yan Yuejin, research director at the Shanghai-based E-house China

The biggest cities such as Shanghai have imposed the toughest controls, especially on the maximum selling prices developers can charge, which has subsequently led to a lack of new supply, with some developers deciding to postpone sales.

As a result more homebuyers have been rushing into the primary market, as any new projects that do become available are generally selling at prices much lower than market valuation.

Many new units started being sold via lottery draws, with the developers themselves ultimately deciding who the purchase orders came from.

But in May Shanghai published a guideline saying that any draws must be conducted under the supervision of the city’s notary office, in a bid to prevent irregularities.

That statement also said that accepting additional fees to gain favour with developers to buy a new home was strictly prohibited.

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