China property

Shenzhen authorities raid 42 property agencies in crackdown on ‘non legal’ activities

PUBLISHED : Friday, 28 October, 2016, 3:57pm
UPDATED : Friday, 28 October, 2016, 3:59pm

Shenzhen authorities launched a new raid on property agencies and peer-to-peer lending platforms on Thursday, and found some lenders were still offering down payment loans after they were banned.

Thirteen inspection teams were dispatched on Wednesday to raid 42 property agents including Centaline Property Group and Shenzhen World Union Properties Consultancy, part of a broader effort to cool down the southern metropolis’ overheated property market. The city introduced fresh curbs on October 4 that included a crackdown on “non-legal activities” of developers and agencies.

Thursday’s raid targeted “non-legal activities” of agencies, including listing pre-owned homes without the consent of the owners, providing false home information, concealing true transaction prices, and charging unreasonable fees. The raid found agencies including Centaline that had listed homes owners didn’t agree to sell.

The raid also found that some unspecified peer-to-peer lending platforms were conducting down payment loan businesses despite the ban. Lured by skyrocketing prices, many investors and speculators had previously resorted to such platforms to pay the minimum deposit on properties, increasing their leverage level and financial risk.

To stem the rampant activities the State Council, China’s cabinet, in mid-October banned such lenders from extending loans to home buyers. Shenzhen’s crackdown showed that such lenders still have a strong incentive to do so even after the ban, as such business is a mainstay of their lending activity, analysts said.

The raid follows an earlier one on October 13, in which 12 inspection teams were dispatched to 20 local housing projects, where they found violations such as false marketing and providing fake divorce certificates for home buyers trying to get around buying restrictions.

Shenzhen’s new home prices fell 0.3 per cent by mid-October from a month earlier, after surging 34.5 per cent year on year in September.