China property

More Hongkongers should be aware of mainland housing scheme, recipient says

Rex Chan took full advantage of fund, which enabled him, to his surprise, to be able to purchase a home in Shanghai

PUBLISHED : Sunday, 24 December, 2017, 9:30am
UPDATED : Sunday, 24 December, 2017, 12:50pm

Hongkonger Rex Chan Chi-wan never thought that after working for five years in mainland China he would be able to buy a flat in Shanghai in 2010, with half a million yuan in savings from a mandatory housing fund for mainland employees.

Chan recalled his story as Beijing announced on December 18 that a scheme where employers and employees contribute equal amounts to an employee’s housing fund, would be available for Hongkongers working across the mainland to buy or rent a flat.

But the 41-year-old director of a major securities company said Hongkongers would only be able to benefit from the nationwide scheme if they knew about it. He said better promotion of the policy and relaxation of related rules would be needed for Hongkongers.

Chan said he had little idea about the labour welfare policy on the mainland in 2005 when he joined his firm in Guangzhou, one of the few cities that allowed Hongkongers entry into the housing fund at the time.

He said he was offered a standard employee welfare package, which included the housing fund, under which he needed to save a certain percentage of his salary every month while the employer would pay the same amount on top of his wage.

“Nobody explained the policies and rules for me. [There were] no other Hongkongers around I could ask for experience,” Chan said.

But believing that he could get the savings in future, Chan decided to join the fund.

While Chan was relocated to the company’s Shanghai office in 2007, their contribution to the housing fund in the Guangzhou account continued.

Three years later, Chan decided to buy a flat in Shanghai and realised that the Guangzhou housing fund authority would allow him to exhaust his account if he could provide all the required paperwork, including the purchasing contract and propriety certificate.

“It took me quite a lot of time to get the full list of documents required, but I got the 500,000 yuan smoothly after I submitted all the papers they asked for in person in Guangzhou,” Chan said.

The half a million yuan covered 83 per cent of a down payment – which accounted for about 30 per cent of the total price of Chan’s home. He financed the rest with loans from a Hong Kong bank’s branch on the mainland.

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“If more education about the fund is provided, and more cases of those benefiting from the fund are told, Hongkongers working on the mainland like me would feel less uncertain of the policy and make wiser decisions when they are allowed to join,” Chan said.

He said mainland authorities should also ease the flat buying rules, which were tightened in the heated property market a few years ago to curb speculative activities.

Wang Fang, a real estate consultant in Shanghai for 12 years, said Shanghai required more documents from non-mainland buyers, ranging from employment certificates, bank account records and tax receipts, to prove they were first-time homebuyers.

Wang added the housing fund might not be as useful as it was before, as property prices had skyrocketed.

“And what could you buy with half a million yuan in today’s Shanghai? Even a shabby old apartment of about 50 to 70 square metres in downtown could cost five million,” Wang said.

Yue Jing-lun, social welfare policy professor at Sun Yat-sen University in Guangzhou, suggested Hongkongers working on the mainland should “simply consider the account as a savings account to which your employer has to contribute every month”.

“Even if you don’t rent or buy a flat with the money, you can take all the savings with you when you change a job, or quit to return to Hong Kong. And the amount of your own deposit can be deducted from your salary so you can pay less tax,” Yue added.

Yue, who is also a labour policy adviser to the Guangdong government, echoed Chan in that promotion of the policy would be important when local governments made changes to it.

“Allowing Hongkongers to join the fund is meaningful in the sense that it’s a recognition of their identities as both a resident and a labourer on the mainland, but like every other policy, it will need some good marketing,” Yue said.