1.         Can I buy a house in China?

It is not that every foreigner coming into China is entitled to buy a house in China. From July 1, 2006, only those who work or study in China for more than one (1) year, are allowed to purchase houses in China. Please note, here we are referring to buying residential property. Foreign individuals are forbidden to buy commercial properties under his or her own name, unless he or she incorporates a company in China to do that.

2.         How many houses can I buy?

Foreigners are not allowed to purchase as many properties as they wish. Though there are no detailed rules and standards for measuring how big a house a foreigner can buy, as a general principle, a foreign individual qualified to buy property shall only buy residential property for self-residing purpose according to his own need. It is interpreted by local governments as that a foreign individual can only buy one (1) house though in practice, it is still possible to buy two (2) houses in certain circumstances.

3.         Do I need to have a Chinese name?

Yes. Foreigners buying property in China are required to have a Chinese name which will appear on your Real Estate Ownership Certificate together with your original name.

4.         Do I have to execute documents and go through related procedures on my own?

Generally speaking, yes.

Alternatively, you can authorize an agent to do all such signing and runaround work on your behalf. In that case, to the extent that your property is located in Shanghai, you need to prepare a power of attorney for your agent, which shall be notarized at a notary institution in China. If you are not in China yet, your power of attorney shall be notarized first in your locality and then present the notarized POA to the Chinese embassy or consulate in your country for attestation.

5.         Can I apply for mortgage loan when purchasing a house? And how much?

Yes. Foreigners are eligible to take out loans in either foreign exchange currencies or in RMB (Chinese official currency). Given the expectation of RMB appreciation in the future, you may be more interested in take foreign exchange loans.

You cannot pay all purchase price by virtue of bank loans. Banks in China are restricted to extend mortgage loan to the extent that the amount of the loan shall account for at most 80% of the total purchase price. In other words, you have to pay at least 20% of the total price out of your own pocket, the down payment as termed in practice.

Further, if you buy a property of more than 90 square meters, your down payment shall account for at least 30% the percentage of the property price, which means your bank loan will account for only 70% thereof. However, rules in China often are bent to some extent, and for premium customers, banks are willing to extend bigger loan than regulated.

You need to confirm with your bank whether there will be any cumbersome formalities and how long it takes to grant your loan.

6.         Do I have to engage a real estate broker to help me?

You don’t have to. But a real estate broker can facilitate your transaction in terms of locating appropriate target houses, coordination with seller, preparation of transaction documents and going through government filing procedures. In return, you need to pay about 1% of the transaction value to the broker as commission.

Alternatively, you can also retain our service. As real estate lawyer, we are allied with many real estate brokerage firms in different localities in Shanghai, which will be employed by us to help our clients in searching, and locating target properties. We can also help to arrange your financing and go through all formalities with government agencies and third-party service providers such as guarantee institutions. Meanwhile, except for that, we will safeguard your interest by taking care of legal issues involved in your transaction. At last, you will pay us only in the similar amount of the broker’s commission (1.0-1.5% of the transaction value) and don’t need to pay any cent to the broker any more.