How to buy in China

The exterior of Leo Seewald's 1930s home in Guangzhou

Chinese buyers are an increasingly common sight at estate agents’ offices across the globe. However, a small but growing band of foreigners is reversing the trend and buying homes in China.

Many international buyers are drawn to China’s dwindling stock of heritage properties. This includes Beijing’s siheyuan, or courtyard homes, most of which were built during the Qing Dynasty (1644-1912) and Shanghai’s art deco apartments and lilong town houses, which date from the early 20th century. These homes are usually centrally located and expensive. A siheyuan with a total area of 550 sq metres, for example, can easily command Rmb60m ($9.6m). Buyers must also budget for renovations, which can top Rmb70,000 per sq metre for a lilong.

For Canadian Leo Seewald, who restored a 1930s red-brick house in Guangzhou, the process was a labour of love. To preserve the home’s character, he had art deco-style iron window grills custom made, and then reused their design on other parts of the house. But Seewald also discovered a drawback to heritage properties: complex ownership structures.

As the population of China’s large cities grew after the 1949 Communist revolution, many homes were subdivided to accommodate multiple families. Locating and reaching a financial agreement with everyone with a claim to a property can be a lengthy and expensive task. A single holdout can scupper a deal and some people abuse the system, which was designed to protect the poor. “There were people who hadn’t lived in the house for years, who demanded money before they would de-register their hukou [residency permit],” says Seewald. De-registration is a prerequisite to completing the purchase of a pre-owned home.

Seewald's garden

China’s building boom and local governments’ reliance on land sales for revenue means that older homes run a greater risk of expropriation than new ones. The central government has improved legal protections for homeowners but the expropriation process remains rapid, opaque and difficult to contest.

In China all urban land is owned by the state, while rural land is owned by collectives. Private ownership of land is forbidden, and urban land used for housing is leased from the state for a 70-year term. When you buy a home in China, you purchase the structure and the remainder of the land lease.

Church's kitchen

Over the past two decades, Chinese construction techniques, materials and designs have improved dramatically. As a result, few banks offer mortgages for homes, other than top-quality heritage properties, that are more than 15 years old. Local buyers also prefer new homes, because they offer modern fixtures and fittings, a full 70-year lease term and no title issues.

These factors influenced Andy Church, an American supply chain and quality management executive, who bought his first flat in Shenzhen in 2006. Church has upgraded twice and now lives in a 100 sq m flat in a six-year-old complex that includes a pool, a gym and a clubhouse. “It’s a gated community, so there’s very little noise,” says Church, who calls it “a little oasis in the chaos of Shenzhen”.

Andy Church on the balcony of his flat in Shenzhen

Church paid cash for his first flat but obtained a US dollar mortgage for his second. Local banks, including Bank of China and Industrial and Commercial Bank of China, only offer renminbi-denominated mortgages. However, multinationals such as HSBC and Standard Chartered, and regional lenders such as Bank of East Asia and DBS, offer mortgages in foreign currencies, including Hong Kong and Singapore dollars. Foreign banks have a limited presence in China – with about 400 branches versus local banks’ more than 60,000 outlets – but compensate by offering personalised service, loan applications and other materials in English.

To qualify for a mortgage, you must have lived in China for at least one year and have a minimum 30 per cent down payment for a first home. Amassing a down payment can be challenging, because foreign exchange rules limit expatriates to converting $50,000 into renminbi each year. Amounts exceeding this limit require approval from the State Administration of Foreign Exchange.

Seewald's living area

The preference for new homes translates to a large number of off-plan sales. New dwellings are normally sold as bare shells and stay this way if the home is held as an investment. This strategy is driven by a dearth of alternatives for domestic investors, low residential rental yields and because property taxes are only levied in Shanghai and Chongqing.

Renovating in China comes with a unique set of challenges, as Janet De Silva and her husband Yves Therien learnt when they paid $950,000 for a 450 sq m villa in Beijing’s Chaoyang district in 2005. To decorate the villa, which was a bare shell, the Canadian couple hired an architect and contractor with an overall budget of $190,000, including labour and materials.

Glass floor to Seewald's wine cellar

While De Silva and Therien were happy with the result, they found that builders in China are not always familiar with western designs and tastes. “It took the contractor five attempts to correctly install a curved staircase and matching glass railing,” says De Silva, “and we had trouble convincing him that the heated basement floor should not extend into the wine cellar.”

The couple sold their home in 2010, taking advantage of a market that rose 160 per cent between 1998 and 2011. While that performance is unlikely to be repeated, house prices will be supported by the 350m people that management consultancy McKinsey expects to migrate from the countryside to China’s cities between 2005 and 2025. Furthermore, as a 2012 report by the Brookings Institution observed, one-third of China’s 225m urban households don’t have a private kitchen or bathroom, creating demand from homeowners looking to upgrade.

Church's apartment block

Finally, the new generation of leaders who were elected in November 2012 remain committed to the doctrine of “socialism with Chinese characteristics” that has fuelled the nation’s economic boom. This includes promoting home ownership, which will benefit both Chinese and international buyers. High-quality, centrally located properties in Beijing, Shanghai and Shenzhen should do particularly well.

Buying guide

Taxes and fees

Buyers pay a 3-5 per cent deed tax. The actual amount depends on the location, and on the agent’s 1-3 per cent commission – although buyers pay no commission when buying a new home from developers. Vendors also pay a 1-3 per cent agent’s fee and 5 per cent capital gains tax if the home has been owned for less than five years.

Only Shanghai and Chongqing currently levy property taxes but this is expected to change. There are no entry or exit taxes.

Living in China

Foreigners represent a tiny proportion of China’s population. Just over 1 per cent of Beijing’s population is foreign-born, against 34 per cent in London and 36 per cent in New York. Foreigners are generally made to feel welcome in China, although many Japanese nationals felt uncomfortable during the 2012 protests over the Diaoyu Islands.

Beijing’s climate features hot summers and cold, dry winters. Shanghai is humid and sub-tropical, with occasional snow. Guangzhou and Shenzhen have hot, damp summers and cool, dry winters.

What you can buy for ...

Rmb63m ($10m) A new, 448 sq m flat in Shanghai’s trendy Xintiandi neighbourhood.

Rmb3m ($481,000) A pre-owned, 90 sq m flat in non-central neighbourhoods of Beijing or Shenzhen.


Hong Kong’s Centaline Property ( is the biggest estate agent in China. International firms, including CB Richard Ellis(, Century 21 (, Colliers International (, Knight Frank ( and Savills ( are active in China’s big cities.

Residency requirements

Circular 171, a rule introduced by the central government in 2006, requires foreigners to be legally resident in China for a minimum of one year before they are eligible to buy a home.

Foreigners are limited to one home, for self-use only. Cities such as Beijing and Shanghai impose additional requirements.

Residents of Hong Kong, Macau and Taiwan are considered to be foreigners.

There are no freehold titles, and residential properties have a maximum 70-year land lease.

Christopher Dillon is author of the ‘Landed’ series of real estate books ( His third book, ‘Landed China’, will be published in early 2013

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