Beijing moves to end practice of faking divorce to be able to buy additional home

By Pearl Liu

/ SCMP |

August 10, 2021 10:12 AM SGT

Photo: Bloomberg

SINGAPORE (EDGEPROP) - Authorities in Beijing have introduced rules to stop couples from faking their divorces to be able to buy more homes in China's capital. (See also: Chinese investors make a beeline for Vietnam's luxury real estate, until their passports run into a wall over South China Sea dispute)

Up until now, the city allowed married couples with a Beijing hukou - China's household registration - to buy two flats in the city. Those without a Beijing hukou as well as singles could buy only one flat. So some couples were getting divorced on paper to be able to buy another property. The new rules, which came into effect on Thursday, are designed to stop this practice.

Now, anyone with a Beijing hukou who is divorced but owned two properties while they were married cannot buy another home in Beijing for three years, according to a notice issued by the Beijing Municipal Commission of Housing and Urban-rural Development late on Thursday. Those without a Beijing hukou, who owned one home during their marriage, will also be barred from buying another home.

"Beijing's move follows similar actions taken by governments in Shanghai and Shenzhen, tightening rules to take on divorces faked for property purposes. It suggests that major cities across the country, especially those with high property prices, will see a similar crackdown," said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institute.

The crackdown on fake divorces is just the latest measure adopted by China to cool its red-hot property market over the years. The central government has vowed to address what it sees as "prominent housing issues" in China's large cities, and to address housing difficulties faced especially by its new urban residents and young people.

In January this year, the Shanghai Housing Bureau said divorced homebuyers will no longer be considered first-time buyers, for a period of three years, if they owned a property during their marriage. This means such buyers will need to put up more money up front to buy a home in China's financial capital. They will not enjoy the higher mortgage allowances reserved for first-time buyers.

The following month, Shenzhen's housing watchdog tighten the city's home purchase rules for divorced couples. The measures rolled out by the city, referred to as "China's Silicon Valley", barring divorced homebuyers from acquiring a new home for three years if they owned two properties while married, have now been emulated by Beijing.

The average price of new homes in China stood at 10,348 yuan (US$1,600) per square metre in June, a decline of about 8 per cent from January, according to E-House. However, prices in major cities continue to rise, with Beijing experiencing a 3.3 per cent year-on-year increase in the first half.

Last month, parents who had bought homes in some subdistricts of Xicheng district in the capital were informed by local education officials that their children would be admitted to schools in other Xicheng neighbourhoods.

The move suggests that a hukou of a subdistrict in Beijing might no longer be enough to secure a spot in a primary school in that subdistrict.

"Such policies are being rolled out to rein in sharp increases in home prices, and we may see more tightening measures being rolled out in Beijing in the second half of this year," said Pan Hao, senior analyst with Beike Research Institute.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

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