The processes in China are very different to many western countries and legal systems. Please remember that we aren’t property agents, so we are writing this from our own experience. However, we have also spoken with some experienced property agents along the way who have helped fill in some of the gaps. Since we could go on and on, and our editor has us aiming for clarity and brevity, we will take you through the steps in a rough chronological order with our comments and tips.

What are the main transaction steps?

1: Sign a contract and pay a signing depositd, a “show you are serious” amount of say RMB10,000.

2:The contract is registered at the Realty Transaction Department in your area. A Property Purchasing Registration Form and a Property Selling Registration Form will have to be completed and filed with the Property Ownership Certificate. Once this has been fulfilled, the Realty Transaction Department will give the vendor and investor a date for the official Realty Transfer Notice to be given. Usually in about a month.

3:At this visit, a pin code is provided establishing that the seller owns the apartment and also that you are the only person in the process of buying this property. This pin code is important. Keep it safe. It can be checked online on the government transaction department’s website, although it is only in Chinese, so you may need a trusted Chinese friend or colleague to help. Only once you have confirmed do you move to the next step.

4: A deposit is paid, usually 30% of the contract price directly to the owner. There is no escrow account, but since you have your pin code, litigation and suing for breach of contract is fairly straightforward (we are told).

5: In some regions of China, you may need to organize approval to purchase. This includes checks on your residency status and a cursory check that you don’t own other properties.

6: Organize your mortgage�this will come with a minimum purchase of insurance (so budget for this) and also understand, that right now, many banks recently are insisting on 40% cash deposit for risk mitigation. We will handle mortgage application tips in a following post.

7: Return to the transaction centre with your agent, the seller, probably a representative of the bank, and possibly your lawyer. This is the big day and it can take time, so arrive early, say 9am or even before. Bring a book or an IPod since there can be long periods of waiting. You must be there to sign the documents; you can’t delegate this to a lawyer.

8: At the transaction centre you pay stamp duty and the seller pays any outstanding property tax. Title is transferred. We will try to clarify and specify taxes in a later post.

9: With the same group on the same day a visit to the property one last time to check all is in order and no damage in the interim, utility numbers are noted, before the bank organizes the final money transfer. Keys are handed over. Congratulations, you own a house in China!

What surprises first time buyers most of all, is the time required by you, the purchaser, to be present during the whole process. Count on it being three to four full days away from work, spread over several half days here and there.

The biggest tip we can offer before you get started, is that you should have someone who speaks fluent Chinese and who understands the property process with you, and most importantly that you trust. A lawyer would be ideal. This list alone won’t keep you safe, but the property purchase process is pretty straightforward once you understand the steps.

Next week, we look at property taxes and fees associated with buying a property in China. The 30% cash deposit for a mortgage to buy a property is just the beginning.

1. You must work or study in China for the minimum of one year. This law does not apply to Overseas Chinese, Hong Kong, Taiwan and Macau residents, who are automatically eligible.

2. Determine the city in which you want to invest. Although popular cities such as Beijing, Shenzhen, Shanghai may be your first thought, other second tier cities like Xiamen, Qingdao, and Hangzhou may actually provide better value and growth. With the government investing heavily into infrastructure, tracking recent railroad building activities may be an indicator of future growth (examples: Hunan and Xinjiang).

3. Find a real estate agent and lawyer familiar with conducting business in China in the market of interest. You will need both to cut through the legal haze and contracts, which will all be clearly written in Mandarin Chinese.

4. Find the property with help from your real estate agent and a few visits to China. For new developments, it is important to research the particular developer and request references. Some properties that are only ten years old on the mainland may look like and function like they have aged fifty years. Also, foreigners are not allowed to live within 0.5 km near government sensitive sites and government official homes -- you may run into this in Beijing especially.

5. Submit your offer via your real estate agent.

6. Prepare your financing. If you are financing through a Chinese bank, then check their particular requirements on income, down payment, and loan amount. If you are exchanging your foreign currency, an individual can exchange up to $50,000 USD annually. More than that requires government approval.

7. Complete the transaction. Complete forms and submit them to the Realty Transaction Department, which can take up to a month. Pay the closing price and sign all the papers. Consult your lawyer to ensure that there is nothing in the contract to be wary of. Buyers are required to pay 3% stamp tax, 2% maintenance tax, and 1.5% contract tax, otherwise the transaction will not go through.

  Chapter I General Provisions

  Article 1 These rules are formulated in order to give full play to the role of providing guarantee to commercial housing purchase housing accumulation fund for employees themselves and effectively reduce the repayment stress of employees who had loans.

  Article 2 Housing accumulation fund hedging repayment means that employees who have already had personal housing accumulation fund loans commission entrust Hengyang Housing Accumulation Fund Management Center (hereinafter referred to as HAF Center ) to offset monthly repayment of loan with the housing accumulation fund of himself or herself and his or her spouse.

  Chapter II Objects and Conditions

  Article 3 Employees who have housing accumulation fund loans by the way of mortgage guarantee can apply to HAF Center for hedging repayment.

  Article 4 To apply for hedging repayment, applicants should meet the following conditions:

  1. Applicants deposit normally housing accumulation fund and have no records of stopping depositing over three months at the moment the employee apply for the loan.

  2. The deposit balance of applicants in personal housing accumulation fund account can pay for the monthly required quota over 6 months.

  3. Applicants don’t have late payment and undesirable overdue record more than three times within one year at the moment the employee apply for the loan.

  4. Both husband and wife of the couple should apply to HAF center for hedging repayment as applicants when they apply for loans if both of them have housing accumulation fund loan.

  Chapter III Hedging Repayment Methods

  Article 5 Hedging Repayment is carried out by the method of monthly repayment,   and HAF center withdraw the corresponding amount of housing accumulation fund from applicants’ accounts monthly as the payment of that month.

  Article 6 Hedging Repayment will be suspended when the balance in housing accumulation fund accounts of applicants is less than monthly repayment for four months. Applicants should pay timely and close attention to their status of balance accounts and mortgage payment in housing accumulation fund accounts. If the balance of housing accumulation fund is not enough, they should replenish the bank accounts until the balance of housing accumulation fund accounts is over monthly repayment for four months and the hedging repayment return to normal.

  Chapter IV Application and Termination of Hedging Repayment

  Article 7 If employees who firstly handle housing accumulation fund loan meet the conditions, they can apply for hedging repayment during loan origination. Applicants who have had loans can apply for hedging repayment form the sixth to fifteenth of every month. They should go to HAF center with loan contract, identity card and marriage certificate, etc. and complete "Personal Housing Accumulation Fund Hedging Repayment Application Form" and sign "Hedging Repayment Agreement"

  Article 8 Employees whose repayments are withheld by their work unit from their salary can`t apply for hedging repayment, but can apply for annual withdrawal business according to rules.

  Article 9 Hedging repayment procedure will be started on its own in the month following the month when applicants sign "Hedging Repayment Agreement" with HAF center. If the following situations arise, HAF center will automatically terminate hedging repayment:

  1. The principal and interest of housing accumulation fund loan have been paid off.

  2. Applicants apply for termination.

  3. Applicants have late payment after applying for hedging repayment.

  4. Employees move out of the former work unit after they apply for loans and the unit which they move in is not at the same place to deposit housing accumulation fund with the former work unit.

  5. Other situations that HAF center find it is not suitable to continue to apply to hedging repayment.

  Chapter V Bylaws

  Article 10 Withdrawal and repayment business conducted by HAF center previously isn’t carried out in principle.

  Article 11 HAF center is responsible for the interpretation of this rule.

Foreigners who intend to buy a house in Beijing need a certificate issued by the Beijing Municipal Public Security Bureau to prove that they have stayed in China for at least one year for reasons of work or study, according to a new rule published on Friday.

A statement jointly issued by six ministries led by the Construction Ministry last July required foreigners to stay in China for at least a year before they would be allowed to buy a house.

The rule required that they only use and dwell in the house themselves and not buy a house for other purposes.
They were also required to use their real names when buying a house in China.

However, property sales for foreigners and foreign organizations came to a temporary halt in Beijing following the statement because it lacked specific requirements.

Friday's new rule jointly issued by the city's five departments led by the Beijing Municipal Construction Committee specifies that foreigners should provide a certificate as to their status when buying a house. They can only buy a house for their personal use, it said.

HK, Macao and Taiwan

Residents from Hong Kong and Macao special administrative regions, Taiwan Province and overseas Chinese should also be in possession of proper certificates when buying a house.

Foreign organizations that set up branches or agencies in Beijing should provide certificates to prove their legal status in the city and give written guarantees that the houses they buy are only used for their own needs.

Foreign organizations and foreign individuals who want to buy houses in Beijing, other than for their own needs, should apply to set up a foreign company first.

If they want to buy houses to rent or sell or change them for commercial use, they should apply to set up a foreign company and obtain an operations certificate.

Foreign embassies in China, representatives of international organizations and people who enjoy diplomatic privileges should have a note of approval to buy a house from the Ministry of Foreign Affairs.

On August 17th, the Ministry of Housing and Urban-Rural Development announced five guidelines for home purchasing, which seek to stabilize the rising housing prices. The guidelines are meant to help local governments evaluate which cities should have increased home-purchasing restrictions applied——if a city meets/exceeds any two of the five listed guidelines, it will be placed on this list.
 
According to some real estate organizations, following these five guidelines, there are already more than 30 cities that should be added to the list. This bold statement takes into account data released by the National Bureau of Statistics, which show that in Qinhuangdao, Ganzhou, Changde, Dandong, Yantai and 13 other second and third tier cities, that housing prices in June had risen more than 5% since last June. Also, analysing the commercial turnover of housing properties, Qinhuangdao, Harbin, Xuzhou, Jining, Yinchuan, Weifang, Beihai, Liuzhou and 17 other cities are the worst offenders: in the first half of this year, the rate of turnover rose 20%.
 
One other indicator shows that some people who live in first tier cities or provincial capitals that already have housing restrictions in place, will often purchase housing properties in the second and third tier cities nearby. Looking at the proportion of housing properties purchased in these cities by non-locals, Langfang, Baoding, Yangzhou, Huizhou, Xianghe, Yichang, Zhenjiang, Zhoushan and other 19 cities are particularly guilty.

Renting in China can be a complicated exercise. As in many places, the process can be complicated and the language barrier can lead to some real misunderstandings. The usual result is that you, as the foreigner, can end up paying more than you expected.

Using an agent to help you through the process can avoid some of the common problems. If not, it may be worth working with a relocation specialist who will help you through the process.

Bear in mind that even if the Chinese copy of the contract has a translation into English, the Chinese version will be the one used as reference by a court in the event of a dispute.

There are short term (<6 months) and long term (>6 months) leasing contracts in China. Usually to rent an apartment you'll need to rent for a period of at least 6 months but preferably a year. Most owners sign a one year leasing contract. It is possible to have short term leasing contracts but it depends on the owners and the terms are usually different e.g. rents are usually more expensive.
 
Payment of the rent
Rental deposits in China
 
Owners usually require 2 months deposit and the first months rent in advance when you sign a long term leasing contract. The receipt for the deposit is called shouju(收据) and is a written recognition that the landlord has received the money. Deposits are often paid upon signing of the lease to ensure unit occupation, compensation for damages caused by the tenant, or non-performance of lease terms.

Should the property condition be deemed acceptable upon lease expiration, the security deposit will be refunded in full.
Deposits are paid back the last day of your leasing contract after you and the owner have checked the apartment. If you break the leasing contract before the end of the leasing date, the owner will keep your 2 months deposit.
 
Management Fees  
The water, electrical and gas meter readings should be written down on the contract.
 
Tax receipt 
 
House Insurance in China
 
Utility bills

1. Electricity is billed monthly. China uses a standard of 220 volts and 50 cycles. Plugs come in at least four designs: three pronged angled pins (as in Australia), three pronged round pins (as in Hong Kong), two flat pins (US style but without the ground wire) and two narrow round pins (European style). You will be able to buy most kind of adapters in China, but it is a good idea to bring a few with you to start.

2. Water is billed bimonthly. The tap water is not drinkable or must be boiled before drinking. We recommend that you use water dispensers with water jugs. The base unit can be purchased at any supermarket. Water containers can be delivered as needed.
3. Gas is billed bimonthly. Most kitchen burners use gas.

4. Cable or Satellite TV: Most buildings are cable ready, and give you access to Chinese channels (about 50 channels), and only one in English (CCTV 9). Some apartments have satellite TV installed but it is quite rare. However if you do want to install it, installation fees cost from $280-570 USD.

5. Phone & Internet are billed monthly. There will be a separate bill for the Internet charges. Usually you need to pay $70 USD for the installation of a broadband Internet connection and every month you pay $20 USD for the leasing.
 
6. A housekeeper - or ayi(阿姨) in Chinese and as also called by most foreigners - costs about 8RMB per hour depending on the number of working hours. Some of the services offered by an ayi include cleaning, ironing, cooking, taking clothes to the dry cleaners and the paying of utility bills. Some ayis speak English or have experience working for foreigners, however they are generally more expensive. If you are living alone it can be great to return home from work to find all your clothes washed and ironed, and your evening dinner waiting in the microwave. Even better, most ayis are wonderful cooks!

It's important to remember that some ayis may not be used to dealing with foreigners and their cultural habits, so be patient with your instructions and expectations. Tipping is not normally expected in China, but if you're satisfied with your ayi's service then a bonus will be more than welcome.
 
The Tenant usually pays gas, water, electricity, and telephone charges. The total cost of these is generally around $65 USD which is the average for one year: expect higher electricity bills during winter and summer.In China, you are not required to have property insurance. In fact, all expatriate places are usually insured by the landlord in case of fire, bad weather, war, water damage or any other cause, which is not attributable to the tenant. If you damage the apartment, you will have to pay for it, or it is possible to get private insurance and insure your personal goods and the goods that are in the apartment.The rental tax receipt (and other tax receipts) are called fa piao(发票) and the landlord has to pay tax to issue the receipt. You need fapiao for rental payments if you intend to use it in Chinese corporate bookkeeping or for any type of tax deductions in China.Before moving in, ensure the space is cleaned and all appliances are in working order. The inventory when you move in should be carefully checked as anywhere in the world. A comprehensive description of any anomalies is made and signed by all parties.The Management fee is payable monthly to the management company of the estate you rent. It covers the cost of maintenance, security of the building and amenities. The feedepends on the building age and facilities offered to the Tenants.
 
Inspection
 
Rent is normally paid in RMB, in cash, a month in advance. In some cases, you can do a money transfer but you will need to open a bank account in a Chinese bank. Rental prices do not include utilities. Usually you need to add Management and tax fees.

STEP 1: Make a plan on house renting
 
How many budget you have, how large, buy or rent, whether houses or apartments, which district or specific area you prefer to live.
 
Gathering information through Internet, newspaper, magazine or among other media.
 
If you can read Chinese version of some property Websites, you may find the prices sometimes are lower than those written in English and focus on Foreigners only.
 
Have a basic concept of the prices for different housing types.
 
STEP 2: Find an agency and the houses you like
 
Each agency will publicize houses they are consigned to rent or sell, you can pick up some among the total.
 
You should visit several outlets of those large and famed local chain agencies around the areas you preferred before make the decision.
 
STEP 3: Check the house at the scene
 
Accompanied with one or two agent, you can visit the landlord and the house. Looking around as careful as you can and ask each question you want to know.
 
STEP 4: Hire an agency
 
If you find your preferred houses and the agency which you can trust and rely on, you may hire the agency to rent or buy the house from its owner.
 
Those agencies will need you to sign a contract with them to restrict you contact directly to landlords.
 
STEP 5: Bargain and sign contract with landlord through your agency
 
Both the leasing and purchasing contracts have their officially recommended version, you can adding some extra clauses after negotiating with your landlord.
 
You may bargain with landlord on the price and other extra conditions, such as repairing, renovation, fares (power supply, water, gas, and property management fee).
 
Make it clear on the responsibilities for taxation, fares (power supply, water, gas, and property management fee), repairing, among others.
 
STEP 6: Go to local real estate exchange center for contract registration
 
STEP 7: Pay deposit (for tenant) and get the key
 
Normally, you should pay the rent for the first month plus two months of rent as deposit before you move to your new home.
 
Remember, no matter buy or rent, registration is necessary, local agencies will do procedures for you or you can hire a lawyer to tackle them.

  Notice about relevant policies on adjustment of Hengyang housing accumulation fund loan

  (Promulgated by decree No.2 of Hengyang Housing Accumulation Fund Management Committee on May18, 2010)

  To People’s Governments of county, city, or district level, departments under the city’s direct leadership and country units under province :

  Having approved by the Fifth meeting of the Second Housing Accumulation Fund Management Committee, the relevant policies on housing accumulation fund loan of our city have been adjusted as follows according to the practical situation of our city in order to serve better board workers who have deposited housing accumulation fund:

  1. The maximum loan amount of housing accumulation fund of our city in 2011 is set for 0.4 million Yuan and loan period of changed to 30 years. Based on the actual situation of employees and units. Hengyang Housing Accumulation Fund Management Center can extend the maximum period for loans to 5 years after the legal retirement age under controlled risks and complete applications.

  2. Housing fund mortgage loans was carried out according to Rules on Hengyang Housing Accumulation Fund Mortgage Loan.

  3. Hedging repayment was carried out according to Rules on Hengyang Housing Accumulation Fund Hedging Repayment.

  4. For employees who have already had loans will be allowed to withdraw the loan principal with the housing accumulation fund of himself or herself, his or her spouse or his or her direct relatives with a month normal repayment when the balance of housing accumulation fund of himself or herself, his or her spouse or his or her direct relatives is over 20 thousand. But the housing accumulation fund of himself or herself and his or her spouse cannot be less than monthly repayment of 3 months after they withdraw hedging loan principal.

  5. For employees who firstly purchase owner-occupied home, their first payment ratio can be reduced to a minimum of 20%, and accordingly the loan-to-value ratio also cannot exceed 80% when they mortgage their own homes.

  6. Returning housing accumulation fund loan in advance is allowed. After a year of normal repayment, employees can withdraw the housing accumulation fund of himself or herself, his or her spouse as a one-time settlement of the principal and interest.

  7. Where the previously issued are inconsistent with the notice, this notice shall prevail.

  Please refer to Rules on Hengyang Housing Accumulation Fund Mortgage Loan and Rules on Hengyang Housing Accumulation Fund Hedging Repayment for details.