The propriety of property for outsiders

• Source: Global Times
• [11:02 July 14 2010]
• Comments

A saleswoman gives prospective buyers a tour of an aparment complex. Photo: IC

By George Wyndham

Foreigners can buy property in this city. Any old laowai chump is allowed to have a pad they can call their very own and decorate as tastelessly as they want. But for many of Shanghai's expat residents a shroud of mystery hangs over the often per-plexing business of buying residential premises. The Global Times recently did its best to sift through the formalities and try to make sense of it all.

Buying by the rules

First and foremost any expat wanting to buy residential property should be aware that each city and province in China has its own specific approach to the management of real estate, and some rules are flexible while others are concrete. Yes it's confusing. According to British lawyer, Bryan Jones, who has been working in the city for six years, it is advisable for any expat to seek legal advice before undertaking to buy a home. "Purchasing residential property in China or more precisely purchasing 'land use rights' can be very complex and expert advice should be sought and retained throughout the entire process." Jones went on to say that buyers should be prepared to spend hours signing dozens of documents in Chinese, and making several visits to the housing department. From the day you sign the purchase agreement to the day you receive the deed in your hand can take anywhere from 40 to 90 days.

One of the most basic Shanghai regulations is that foreign nationals are only allowed to buy property as long as they intend to live in those premises. Real Estate Supervisor Jenny Wang, from Phoenix Property Agency said, "It is mandatory to make sure the potential foreign buyer has lived in Shanghai for over a year and more importantly is working here." She explained that not only must each foreign client provide evidence that they have been living in the city, they are also required to provide a copy of a labor contract proving that they have been working for a Shanghai-based company for at least 12 months. As well, all foreigners must have a visa that allows a stay of 12 months at the time the contract sale is completed.

The main reason for these measures is to discourage foreigners from renting out their properties. It's the reason why foreigners in China are barred from owning more than one residential property at a time. According to Wang, foreigners are prevented from renting because local authorities don't want to see the Chinese residential housing markets dominated by outsiders. So far the residential market has been carefully monitored as the local government wants to keep property competitive on a local level. Despite this, Wang said many foreigners rented out properties post-purchase. Even though this is illegal, it's a law that is almost impossible to implement.