The central government of China has announced that the definition of second-home purchases will be based on the number of homes owned by a family, rather than by each person.
The new policy will put an end to various definitions of second homes that many banks have been using when giving loans. But market observers said it will not be easy to have buyers’ full information, as owners could find loopholes from this new policy.
The actual and total property holdings of a family will be calculated together with the house owned by the applicant as well as their spouse and minor children, according to a statement released jointly by the China Banking Regulatory Commission, the People’s Bank of China and the Ministry of Housing and Urban-Rural Development.
The announcement also stressed that banks should ask for higher mortgage rates and down payment if one of the family members already owns a property with an active loan. But insiders said the policy still has loopholes in terms of securing buyers’ information.
“The policy needs efforts from different departments, such as the household registration department, the housing management department and the property department, but buyers’ information has not been shared among them," said Shi Zheng, a consultant from Weiyan Property in Beijing.
"It is hard to check buyers’ purchasing record currently if the family members are in different places.”
Chen Zhi, vice secretary-general of the Beijing Real Estate Association, shared her opinion.
"The housing registration system has not implemented nationwide connections, and it is impossible to check buyers’ purchasing records in other places," said Chen.
The central government has implemented several tough measures in the real estate market since April, including the raising of down payment for second home loans. This was followed by a 70 percent decline in commercial housing transactions in the first- and second-tier cities in May.