Buying a property in China
No matter where you live finding a property to buy or rent can be a truly stressful experience. Because of the cultural differences and language barriers some expats find negotiating the Chinese property market particularly tricky, but it doesn’t have to be.
In the past it was policy for foreigners to occupy designated properties away from the local population. Luckily that rule no longer applies and generally expat housing conditions/restrictions are no different than those imposed on the Chinese. However, there are significant differences between the process of buying, selling or renting a property in China and the UK.
If you want to avoid any nasty surprises and hidden costs than research is key!
Remember, although some situations cannot be predicted the majority of issues experienced by expats regarding property in China can be easily avoided or prepared for.
Types of Housing
There are several distinct types of housing in China. Standard apartments are by far the most common option but expats can also chose to live in serviced apartments, villas, dormitories and hotels.
Villas are a relatively new style of housing in much of China and are the option of choice for the wealthier individual. Villa’s are really just attached or detached houses of mid to large size. Generally they are constructed in a distinct style (like Mediterranean) and built within a walled complex. They don’t come cheap!
Locals and expat’s live in standard apartments all over China, but there’s really nothing ‘standard’ about them. The cost, size and quality of standard apartments can vary considerably, particularly in different areas. It’s essential to view a potential property before making any commitment. Some apartments in larger cities may come in complexes with added amenities like swimming pools but in rural areas others may not even come with a western-style toilet! This is one nation where you definitely get what you pay for. If the rent sounds wonderfully low then there’s probably a reason why.
Sharing an apartment with another expat can be a good option for some people as you can split costs and lend each other support as you acclimatise. Alternatively you may want to rent a single room from a local – a particularly good way of immersing yourself in Chinese culture. Some may even ask for language lessons instead of rent. If you choose to take the route of living with a Chinese person then you are legally required to register the fact with the local Public Services Bureau.
In the main, standard apartments in China are individually owned but any formal dealings will be handled by the service provider of the apartment’s management company.
It is mainly highly rated hotels which offer the costly option of serviced apartments. For a price they take away all the hassle of cleaning, washing, ironing and cooking – but such properties are generally only rented on a short term basis.
Foreign students are commonly housed in dormitory rooms which they may or may not have to share. Some come with small private bathrooms but others only have shared bathroom facilities.
English teachers can usually expect a small shared or private apartment on campus. Housing for teachers is usually paid for by the university but a proportion of utility costs are covered by the individual.
The majority of properties in China will be advertised to new occupants as furnished. Bear in mind that if a property is described as unfurnished it probably won’t have essential appliances like a fridge or cooker.
Something the majority of expats don’t realise is that the level an apartment is on can really affect the rental/purchase price. Generally speaking, the higher the floor the more expensive the property.
Something which is culturally important in China is the direction the apartment faces in. If an apartment is situated in such a way as to command good feng shui it will be more desirable to locals and probably cost more in rent.
In China you can engage the services of an ayi, or housekeeper who will do most household chores and some errands. Ayi which speak English are generally more expensive than those which don’t.
Ways of finding a property
If you want to brave the property market alone there are several avenues open to you. The internet is obviously a good source (particularly online classified sections) but so are local newspapers and property shows.
In order to find a suitable property some expats, particularly those without a firm grasp of Chinese, engage the services of an estate agent. This method of arranging accommodation can take quite a long time and unless the rent on the property is particularly high there will be commission to pay. If an estate agent fails to find a property for you, you shouldn’t have to pay them!
However you find your home make sure that you have all the information you need before you make any kind of commitment.
More expats rent properties in China than buy, but renting can be complicated – particularly for those who don’t speak the language.
Most people find that using an agent can make the process simpler.
The majority of leasing contracts are either short term (which is classed as six months or less) and long term (which is classed as more than six months).
On first taking a property for a long term lease the occupant is generally asked to give 2 months deposit (to be repaid on the last day of your contract) and the first month’s rent up front. In return the occupant is given a receipt known as a shouju. Remember, any damage to the property will come out of the deposit!
Rent is usually paid a month in advance in RMB and doesn’t include utilities. If you would rather pay by direct debit than in cash you will need to have a Chinese bank account.
Utilities, tax and management fees are all additional costs. (Management fees cover the maintenance of any public areas in your apartment building and can vary greatly). Electricity, water, gas, phone and internet connection are paid monthly.
If renting a property you don’t need to take out home insurance as the property is nearly always covered by the landlord, but will need to check this and you may want to take out private insurance to cover your possessions.
If you decide to take the plunge and buy a property in China than don’t rush, do your research and make sure you’re in possession of all the facts.
For example, did you know that when you buy a home in China you are buying the building but not the land it’s built on? No matter how many times a property changes hands the land it sits on continues to be owned by the Chinese government.
Owning a house in China also doesn’t give you the right to residency, this must be sought separately.
Further, in the majority of house sales in China the buyer will pay in cash (without the need of mortgages or loans) which makes the process considerably quicker than in western nations!
On top of the cost of the property itself you will be legally required to pay the Chinese government a1.5% contract tax, a 2% maintenance tax, 3% stamp duty and (for a resale property) a further 0.1% stamp duty. Make sure to factor in all costs!
As the rules and regulations regarding the purchase of property in China change quite frequently it is essential to do thorough research.
Making on offer on a house in China usually requires composing a letter listing the price you are prepared to pay and any additional conditions/requirements. It might seem odd but a deposit (of roughly 1% of the sales price) is submitted with the offer. This shows the property owner that you are serious about securing the deal.
If the offer is accepted a payment method needs to be set up. However you decide to make your payment (cash, cheque, loan) the Public Security Bureau or estate agent will have to approve your payment method. When signing the contract it is usual for all taxes, fees and 30% of the property price to be paid. After both parties have signed the contract is notarized.
Only after the contracts are signed and the costs are paid is the deed transferred to the buyer. It is then the responsibility of the buyer to pay the outstanding amount. Once you have the property is legally yours!