Essentials for Buying Properties in P R China

1
Essentials for Buying Propertiesin P R China

• By
• Lu Qian
• Professor Emeritus, Tsinghua University
• Professor, Shenzhen University

2
Urban Housing Reform in China since 1979

• 1979-1986 The Adoption of "Socialist
  Market Economy"
• 1987-1989 Emerging to Nationwide Reform
  Period
• 1990-1994 Housing Reform Reinforcement
  Period
• 1995-2000 New national Reform Period

3
Essential Psychological Aspects in Making
Decision on Buying Houses

• Hoping to buy a house at the lowest price without
  properly considering its location, traffic
  convenience, pollution , noise etc.
• merely entrusting a well-known real estate
  development or housing management firm, without
  making careful comparison and analysis

4
Essential Psychological Aspects in Making
Decision on Buying Houses

• Hoping to complete the deal as quickly as
  possible without making careful analysis and
  comparison of several available alternatives
• Merely being attracted by the beautiful
  appearance and nice environment of the house
  without duly considering its poor functions and
  inadequate interior planning

5
The Latest Information

• There are more than 60,000,000 m2 unsold
  commodity housing all over China by the end of
  1998 according to the information issued by the
  Ministry of Construction of PRC.
• The main reasons are The bulk of real estate
  development has not been reasonably controlled.

6
Latest Information

• Development projects exceeded the actual demand
  of the real estate market
• The construction of municipal and public service
  facilities lies far behind the tempo of housing
  development.
• Poor quality of completed housing projects
• Property price has been much high and cannot be
  lowered due to many reasons

7
Latest Information

• The Ministry of Finance and the National
  Taxation Administration recently issued a
  Circular , stating that upon the approval of the
  State Council, the business tax, real estate
  deeds tax, value-added tax of the real estate
  market has been greatly reduced since the first
  August 1999.

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The House to be Sold shall be Legally Justified

• The developer shall provide seven certificates
• 1. Certificate of state land use
• 2. Construction planning permit of land
• 3. Planning permit for construction works
• 4. Construction permit for building project
• 5. Sale permit for commodity housing in
  construction or Sale permit for commodity housing
• 6. Quality guarantee of residential building
• 7. Instructions to residential building use

9
How to Avoid not Being Cheated in Signing House
Purchase Contract

• Use the standard version of commodity housing
  sale and purchase contract recognized by the
  local government instead of using the contract
  unilaterally worked out by the developer.
• For example ,"the contract for selling commodity
  housing in construction to foreigners" and "Sale
  and purchase contract of commodity housing for
  foreign buyers

10
Main Contents of Sale and Purchase Contract of
Commodity Housing

• Approval of the used land,location of the
  commodity housing
• time for taking over of the commodity housing
• Total contract price,ways of payment, payment
  time schedule
• floor area, usable area

11
Main Contents of Sale and Purchase Contract of
Commodity Housing

• State of commodity housing In construction or
  constructed
• Nature of property rights of the commodity
  housing, specified time of registration of
  property rights, responsibility of relevant
  parties
• Provisions concerning design variations

12
Main Contents of Sale and Purchase Contract of
Commodity Housing

• Obligations and responsibilities of the seller
  concerning building decoration and finishing,
  standard of building facilities and quality of
  the building
• real estate management and post-sale service and
  repairs
• How to treat problems due to the difference
  between the floor area specified by the contract
  and the actual floor area
• responsibilities of breach of contract

13
Is it Cheaper to Buy a House by Auction Sale?

• Auction sale of commodity housing gives a
  cheaper way to buy houses as shown by the
  practice in Shenzhen.
• Floor area 64.10 m2
• Upset price 148,712 yuan
• Auction price 148,712 yuan
• Unit Price 2320 yuan/m2