Beijing Bans Unapproved Property Deposit Taking
BEIJING, Apr. 22 – In additional moves to quell the rampant increases in China’s property market, Beijing has banned the taking of any deposits for properties unless they are officially approved prior to the application.
The move to tighten pre-sale rules bans developers from taking deposits from prospective buyers of uncompleted homes until the developer obtains official approval to do so. The new rules dictate that developers must first obtain government approval to take deposits, and then publish the price of each unit within 10 days. The aim is to restrict developers from pushing up prices prior to the official sale of a property.
In related news, prospective buyers who have already made non-refundable deposits are walking away from the sale on fears of property price falls. Market sentiment is changing and the cooling measures introduced by Beijing are regarded as pushing down values. Prices are expected to decline by about 20 percent across the board before investor confidence is restored.
The State Council has already made it harder to acquire property by increasing the mortgage down payment requirement to a minimum of 50 percent deposit from the previous 40 percent, and has asked banks to stop loans for third home purchases. Measures have also included the non-provision of loans to buyers who cannot produce tax returns or proof of social security contributions.
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