Shanghai changes rules to stop couples from faking divorces as they vie for less up-front money to buy residential property
- Divorced homebuyers will no longer be considered first-time buyers for a period of three years if they had owned a property during their marriage
- Shanghai’s housing bureau also extended the dutiable period for a 5.3 per cent value-added tax to five years in the resale of homes
Shanghai’s local authorities have introduced some of the most draconian policies in years to curb speculation in residential real estate, including rules to define property rights among estranged couples in the nation’s costliest housing market.
The move is an attempt to crack down on married couples who fake their separation on paper – but cohabiting in practice – to qualify for allotments or mortgage entitlement to buy property. It followed a 10.3 per cent jump last year in the average price of lived-in homes in Shanghai, China’s premier commercial hub, a faster growth pace than any other major urban centre in the country.
“The new regulation will curb the practise of fake divorces in China,” said Sherril Sheng, director of research at JLL in China. “It is a reasonable step to close loopholes.”
A dearth of investible options has propelled China’s rising middle class to seek the sanctuary of a variety of get-rich-quick and exotic schemes, from speculation in Pu’er tea to parking their savings in fixed assets. Sales of new homes rose 21 per cent in 2020 to a four-year high of 9.2 million square metres, while transactions in the secondary market jumped 82.7 per cent, according to Savills.