Highlighted Property Related Policy in the First Half of 2016

In the first half of 2016, some important policy related to property and land market are published by the nation. Aquaspace has collected various of news and summarized them in the below post:



Nationwide Policy

1. First-time buyers in certain cities would need to pony up 20% instead of 25% (February 2nd)

The announcement published by the People's Bank of China said that at cities where there were no restriction house purchasing policy, the minimum down payment required for first-time home buyers seeking a mortgage would be reduced to 20%, even though the level "in principle" is set at 25%. For families that own property and haven't repaid their first mortgage, the down payment on a second property will be reduced to 30% from 40.



2. China raises deposit rate for housing provident fund (February 21st)

China raised the deposit interest rate for its housing provident fund to give higher interest rates on savings. The rate will be increased to 1.5 percent from previous 0.35 percent or 1.1 percent, depending on when the deposits were placed.


3. New Policy on deed taxation (February 22nd)

Chinese government issued a document to reduce the tax burden on homebuyers. According to the document, the deed tax will be reduced from 3 percent to 1.5 percent for first-time buyers of properties larger than 90 square meters and to 1 percent if the property is smaller than that. This will apply nationwide. Those purchasing a second home will also pay 1 percent if the property is less than 90 square meters and 2 percent if the property is larger than that. This excludes purchases in Beijing, Shanghai, Guangzhou, and Shenzhen, the so-called first-tier metropolises, where the demand for housing has already pushed up prices. These four metropolises only adjusted the first- time buyers’ deed tax.


4. New directive says roads in private housing estates should "gradually open up" to the public (February 22nd)

The new urban-development regulation declares that internal roads in private housing estates should "gradually open up" to the public in order to ease traffic congestion. In addition, no new-gated communities can be built in the future. 


5. China expands VAT reform to new sectors: launch date (May 1st)

In the 2016 National People’s Congress this month, Li Keqiang, China's Premier, announced in the Government Work Report that Value Added Tax (VAT) reforms will be fully implemented and expanded to the construction, real estate, financial and consumer services industries starting from May 1, 2016.  



6. China to further cut social security burden on individuals, enterprises (May 1st)

China will further reduce the burden on individuals and enterprises by cutting their payment to the social security funds. The new policy aims to relieve corporate burden and increase workers' cash income. Under the policy, enterprises that contribute more than 20 percent of the pension insurance payment can reduce the rate to 20 percent, while those in provinces that see sufficient funds can lower the rate to 19 percent. The rate of the unemployment insurance will range between 1 percent and 1.5 percent, down from the current 2 percent, and that of housing provident funds should stay below 12 percent.


7. State Council to develop house leasing market (May 4th)

The State Council executive meeting presided by Premier Li Keqiang on May 4 decided to develop the house leasing market to promote the new type of urbanization. Individuals and investors are encouraged to purchase commercial housing, and being the supplier in the house leasing market. Developing enterprises whose major business is house leasing is also encouraged.


Shanghai Policy

1. New Policy on deed taxation (February 22nd)

Individuals purchase the only home will pay 1 percent if the property is less than 90 square meters and 1.5 percent if the property is larger than that.



2. Shanghai to lift supply of smaller homes to spur higher ownership (February 23rd)

Shanghai increases the supply of medium to small-sized apartments to allow more people to own homes. Shanghai’s latest policy requires that medium to small-sized apartments should account for at least 60 percent of new housing development in the city’s outlying areas, and 70 percent and above if it's located in urban areas



3. Shanghai Makes Changes to Housing Policy (March 25th)

Shanghai Tightens Non-Local Homebuyer Rules as Prices Surge

Shanghai unveiled a package of measures designed to stem a surge in property prices in the metropolis, underscoring how regulators in top-tier cities are shifting gears in an economy where housing has been a brake on growth in recent years. The local government will tighten approval criteria for non-resident homebuyers, raise down-payment requirements for some second homes and ban unregulated lending.


Non-local homebuyers required to pay taxes for at least five years in a row before buying a property in the city, compared with the previous requirement of just two years of tax payments. The houses that enterprises purchases can be re-sold only if they have purchased it for more than 3 years. 



Shanghai Move to Tame Surging Home Prices

Shanghai has taken new regulations to cool the home market to curb speculation for home purchasing and better regulate property sales and investment. Under Shanghai's new rules, local families with one property will have to pay at least 50 percent down-payment for a second home. The minimum down payment will rise to 70 percent if the house is either above 140 square meters or priced above 4.5 million yuan and is located within the inner core of the city.