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How to Buy Property in Shanghai for foreigners

by reachhome on 2017年11月30日
, How to Buy Property in Shanghai for foreigners

How to Buying a home in Shanghai can seem like a daunting and at times, futile experience.

With Shanghai being by far the most expensive city in mainland China to buy real estate, alongside a white-hot property market which has seen prices rise by 19% in the past year alone, and some neighbourhoods seeing a 40% rise since 2013, Shanghainese are increasingly sticking to renting, the cost of which has remained static.

The average apartment in the central areas of Shanghai now goes for roughly RMB8,500 per square foot, making it considerably pricier than other first-tier cities.

, How to Buy Property in Shanghai for foreigners

If you’re an expat looking to buy in Shanghai, things get a little more complicated, as the government has placed strict regulations on foreigners buying property as part of a wider effort to cool down the market.

If you’re looking to settle down in Shanghai, there’s a whole bunch of terms, rules and regulations you should be aware of before you start. Here’s a brief guide to buying property as a foreigner in Shanghai.

, How to Buy Property in Shanghai for foreigners

Qualifications

  • First off, it’s important to know that before you can even consider buying real estate in Shanghai, you need to be a “Qualified Expat Buyer.”
  • Proof you have lived in the city for at least 12 months to be eligible to buy. For this you’ll need copies of your tax records and employment contract, and don’t be surprised if you’re asked to provide records which go back even further than 12 months.
  • You will also need to provide evidence of a valid Alien Work Permit and Residency Permit, both of which should have been issued at least a year earlier. 
  • If you can have a Chinese national sign for the property in their name, they can then transfer to you once you attain Qualified Expat Buyer Status. This is risky for obvious reasons, and it’s vital that you completely trust the person who is signing for a house on your behalf.
  • Unlike some other countries you do not need to have a particular amount of cash in the bank before you can purchase a property

, How to Buy Property in Shanghai for foreigners

Rules

  • It’s also important to remember that if you buy property in Shanghai, you’ll be expected to live there.
  • Purchasing housing as a rental property is strictly off-limits, and you’re only allowed to own one property at a time.
  • Furthermore, foreigners are not permitted to buy commercial property in Shanghai, so you should double-check that wherever you’re planning on moving into is definitely a strictly residential dwelling.
  • You should also know that the government owns all of the land in the country and that when you buy a property you’re technically only leasing that land for a 70-year period. Foreign-owned companies are however allowed to purchase commerical property.
  • Foreigners are eligible to take out a mortgage loan in China with certain terms and conditions based on income and credit score. However the loan may only cover a maximum of 70% of the property value. 

, How to Buy Property in Shanghai for foreigners

Before You Buy 

There are a few steps you can take early on to avoid unnecessary legal drama further down the line.

  • You should ensure that whoever you’re buying the property from has the right to sell, meaning they should be able to produce a deed to the house, valid identification, and written consent to sell from any co-owners of the property. The last thing you want is to hand over a down payment to someone who doesn’t actually have a house to sell to you. 
  • It is the duty of the real estate agency to run a title search and a Hukou Check on the property you’re interested in buying, as property values in China are significantly affected by Hukou. 
  • When you’ve finally found that perfect apartment or adorable lane house and wish to make an offer, there’s a few more terms you should know about. If the seller agrees on an offer it’s common practice to immediately pay them a fee known as Earnest Money, which essentially locks the seller into the deal and prevents them from defecting to another buyer (e.g. if a higher offer is made). The size of the payment is entirely up to the discretion of the seller and is often negotiated between the two parties beforehand.
  • Should either the buyer or seller breach any agreed upon terms (e.g. if the seller backs out of the deal because the value of the property has since increased) then they’re required to pay the un-breaching party some Breach Compensation, which typically amounts to double the amount of the Earnest Money paid by the buyer, but can vary greatly.
  • There’s also of course the down payment, which as you may be aware, is the amount the buyer pays to the seller at the closing of the deal in order to formally obtain the property. However, it should be noted that there are no legal limits on the size of a down payment, but both parties can negotiate the amount in the contract.

, How to Buy Property in Shanghai for foreigners

Steps

The essential steps to buying a home in Shanghai are:

  1. Signing a contract with the seller, provided by the party which is selling the property. 
  2. Registering a copy of that contract with your local police station.
  3. Signing a new contract under the supervision of a government official, thus recording the sale with the Chinese government.
  4. Finalize the purchase by accompanying the seller to a local Property Exchange Center (房地产交易中心), where they will officially transfer the title of ownership over to you. Every district in Shanghai has a property exchange center and it’s advisable that you bring along someone who speaks Mandarin if you yourself do not. 

And there you have it! You’ve just been handed the keys to your new home and you’re ready to settle down as an official Shanghainese resident. That wasn’t so hard, was it?

This is only a brief guide to some of the key aspects of buying property in Shanghai specifically, for more detailed information and guidance you can consult REACH HOME, who specialize in helping expats move to China.

For those who are currently trying to figure out where to buy in Shanghai, here’s the average cost of residential property per square meter for each area.

 

Jing’An: RMB95,359 per sqm 

Huangpu: RMB88,874 per sqm

Xuhui: RMB72,869 per sqm 

Changning: RMB71,729 per sqm 

Hongkou: RMB69,173 per sqm 

Yangpu: RMB66,505 per sqm 

Zhabei: RMB66,366 per sqm 

Putuo: RMB61,401 per sqm 

Pudong: RMB57,840 per sqm

 

Contact:         REACHHOME Realty

Email:            info@reachhomerealty.com

Mob/Wechat:  +86 13818887792

Websit:       www. flatsh.com

 

 

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