China property

Beijing eases previous ban on flats sold on commercial land

Beijing has bowed to pressure, lifting a ban on agents to sell commercial apartments, but homeowners fear the change introduced uncertainties that will deter further purchases

PUBLISHED : Wednesday, 24 May, 2017, 8:41pm
UPDATED : Wednesday, 24 May, 2017, 10:59pm

Beijing has lifted a ban prohibiting local property agencies from marketing and selling previously-owned apartments built on land zoned for commercial or office use, bowing to public pressure following weekend protests from homeowners.

The Housing and Urban-rural Development Commission issued a statement on Tuesday evening saying that apartments purchased before March 26 can be listed and sold via local property agencies.

The policy is an apparent softening of restrictions imposed in March which blocked the sale of new apartments built on plots that were originally acquired as commercial or office land.

Shortly after that policy was unveiled, officials demanded property agents take down listings for previously-owned homes built on commercial land, or so-called “commercial apartments”.

The Beijing city government’s concessionary move to back down from its heavy-handed approach is the first among 55 mainland cities that have rolled out about 160 new policies to strengthen curbs on frenetic purchases and skyrocketing property prices since last October.

It reflected the government’s wariness of the prevailing social undercurrents and a potential backlash in the months running up to an important party congress in the autumn.

“Beijing’s fine-tuning suggests that their previous policies are too rough, which raised many doubts,” said Yan Yuejin, a research director with E-house China R&D Institute. Yan was referring to the fact that the policy did not previously distinguish between apartments bought before and after March 26, which resulted in commercial apartment owners not being able to sell their properties to buy regular residential apartments.

Last week, the Shanghai government called off the approval of commercial titled residential developments and demanded a re-evaluation of those yet to be launched for sale. Guangzhou and Shenzhen also imposed similar crackdowns that demanded new developments to be restored to commercial design.

Shanghai blocks sales of commercial property converted for residential use

But Beijing’s ban had covered commercial apartments bought before the policy was introduced.

Under the policy, Beijing not only banned the sale of new commercial apartments, but also the sale of existing ones to non-locals without a Beijing hukou. Property agents were disallowed to list such units for rent or sale, and banks could not provide loans to purchase such apartments.

Beijing’s fine-tuning suggests that their previous policies are too tough, which raised many doubts
Yan Yuejin, E-house China R and D Institute

The policy is seen to have hurt the interests of hundreds of thousands of owners, who bought such apartments either because they were barred from buying regular apartments or were in a transitional phase to buy one.

Homeowners have protested at developers’ sites, Beijing housing commission and the municipal government in the past two months. Protests also sprouted in Shanghai’s city centre on Wednesday.

Owners’ angry protests show why Beijing must tip toe in curbing the property market

The Post visited a few property agents in Beijing on Wednesday, and found that the agents still could not list commercial apartments for lease or sale on their websites, though customers can visit the outlets in person to obtain information.

Last week only nine commercial apartments were sold across the city, according to Centaline Property, down from 2,264 units in the week prior to the curb. Transaction prices fell by 40 per cent.

Sale of regular secondhand homes also fell to 2,680 units, from the pre-curb level of 8,769 units per week, as commercial apartment owners were unable to sell their properties to buy regular apartments.

Owners are mixed towards the government’s policy change. Some saw this as a hard-won victory and are satisfied with the results. Others felt that their properties remained unfairly treated, and vowed to continue to fight.

Li Yanyan, a commercial apartment owner, said: “Although the apartments can be rented, buyers still can’t apply for loans to buy them, neither can owners pledge them as collateral for loans. The most crippling restrictions remain in place.”

A bigger concern to owners was the policy change has introduced uncertainties that deterred potential buyers from buying these units.

“After all the turmoil, who dares to buy such units in the future? Who is going to compensate for my losses?” Li questioned.