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Beijing calls off all favorable policies on housing purchases

By Cai Muyuan (chinadaily.com.cn)
Updated: 2010-02-24 15:02
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Beijing Tuesday cancelled all favorable policies for buying housing in the Chinese capital, including those for foreigners, in a bid to strengthen control over its real estate market, the 21st Century Business Herald reported.

The news comes about 10 days before China's top legislature, the National People's Congress (NPC), convenes its annual session on March 5. An industry insider believes the timing is carefully calculated and that other cities are expected to follow suit, according to the newspaper.

Starting from Jan 1, 2010, Beijing halts all preferential policies on housing purchases that were launched at the end of 2008, the Beijing Municipal Commission of Housing and Urban-Rural Development said in a notice posted online minutes after 17:00 when most office workers leave work.

Now homebuyers have to make a down payment of at least 40 percent to buy a second residential property, instead of the 20 percent provided by some banks in 2009, said the notice, which is entitled "Suggestions on Promoting the Sustainable and Healthy Development of Real Estate Market in Beijing."

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In addition, individuals have to own their residential properties for at least five years to enjoy zero business tax when selling their houses. In 2009, the time limit was reduced to two years.

Foreigners in Beijing are also influenced by the notice, since the city resumes restrictions on them. According to the notice, overseas individuals who work or study for a year or less in Beijing can not purchase houses. Qualified overseas individuals can only purchase one home, and only for self-stay purposes.

Such requirements are expected to curb sales of high-end properties, said Lin Qian, vice president of Beijing Homelink Real Estate, a leading property broker in China.

Lin noted that the opening price for residential properties inside Fourth Ring Road in Beijing stands at 35,000 yuan per square meter, and the main buyers are either domestic investors or foreigners. In 2009, the proportion of residential properties purchased by foreigners was 5 percent. If not controlled, the number is expected to rise dramatically in 2010.

Calling off the favorable policies for foreigners can also prevent an influx of hot money to buy property and then quickly resell it at a higher price, Lin said.

According to the notice, among all newly started residential properties in 2010 in Beijing, 50 percent (134,000 units) are policy-related homes. Qualified families which have been on the waiting list by the end of last year will be covered, the newspaper reported.

Publishing such a policy days before the important national sessions, Beijing will surely help improve market confidence and curb real estate speculation, said Chen Guoqiang, a researcher with Peking University.