Chinese couples in divorce rush to evade home buyer rules

Chinese couples are scrambling to get divorced in order to circumvent government restrictions that require people to make a bigger down payment if they want to purchase a second house.
Chinese couples are scrambling to get divorced in order to circumvent government restrictions that require people to make a bigger down payment if they want to purchase a second house.PHOTO: THE NEW PAPER

'Fake divorces' being used to avoid bigger down payments on multiple properties

BEIJING • Chinese couples are scrambling to get divorced in order to circumvent government restrictions that require people to make a bigger down payment if they want to purchase a second house.

"Nowadays, families are using 'fake divorces' as a tool to skirt the home purchase restrictions for different reasons, such as avoiding the home purchase tax or buying a house in a school district," Mr Lin Nan, a Beijing-based lawyer from Liang Gao Law Firm, which specialises in marriage cases, told The Global Times.

Under Shanghai's current government policy, a first-time home buyer needs to put down a 30 per cent down payment for a house. However, in the case of a second house, the down payment requirement rises to 50 per cent. For a third house, it becomes 70 per cent, reported The Global Times.

"We already have two apartments but if we do not buy a third one, our housing accumulation fund would be wasted. Besides, real estate is a good investment option," one anonymous Shanghai resident who was planning a "fake divorce" said.

Sixty-four out of 70 Chinese cities surveyed in August reported a month-on-month increase in new home prices, according to the National Bureau of Statistics.

 

As price hikes extended from first-tier cities to medium-sized ones, Suzhou, Xiamen and Hangzhou resumed home purchase restrictions. Other cities raised minimum deposit requirements.

Couples in Shanghai are not alone. According to a local newspaper in Guangzhou, the capital of Guangdong province, appointments with a divorce official in September were fully booked in less than a week.

Amid the scramble to get divorced, a rumour that the restrictions in Shanghai would be extended to people who have been divorced less than a year caused a panic, though the authorities later dismissed this.

Mr Lin said that the restrictions needed to take into account the reasonable needs for home purchases.

He also stated that the courts are unable to distinguish between a real divorce and a fake one, but the policy to curb housing prices was not intended to lead to actual separations.

An anonymous Beijing resident said: "They still live a normal married life. The only thing that is different is what's written on their marriage documents. Some are even expecting their second child."

Professor Hu Xingdou, who teaches at the Beijing Institute of Technology, said that the purchase restrictions may have little effect on preventing the real estate market from overheating.

"More investment choices should be provided to people, which calls for a more regulated capital market," he said.

A version of this article appeared in the print edition of The Straits Times on September 21, 2016, with the headline 'Chinese couples in divorce rush to evade home buyer rules'. Print Edition | Subscribe