Monday, August 14, 2023
By Nan Chen
Legal assistant
Since July 2006, foreign companies and individuals are no longer permitted todirectly acquire and hold PRC real estate for “investment purposes” (eg, greenfield development projects and acquisition of buildings for investment holding and/or leasing). Today, foreign companies and individuals must obtain approval from the PRC foreign investment authority to set up a local company to carry out real estate investment.
I. INTRODUCTION
According to the current law, foreign companies and individuals may directly acquire PRC real estate for “self-use” or “self-residence” purposes in certain limited circumstances. Foreign companies may purchase a “reasonable quantity” of buildings for self-use for their representative offices or branches in China. Note, however, that foreign companies and individuals from countries without diplomatic relations with China could be restricted from acquiring PRC real estate even for self-use purposes.
II. APPLICATION
For application with the designated bank, foreign individuals and entities need to submit the following materials:
1. Branches or representative offices established by foreign entities.
(1) Sales or pre-sales contract for the property;
(2) Approval documents for the establishment of the domestic branch or representative office and valid registration certificate;
(3) Relevant certificates issued by the competent real estate authority regarding the registration and filing of the pre-sales contract of the property signed by the domestic branch or representative office; and
(4)A written undertaking stating that the purchased property meets the principle of self-use.
2. Foreign individuals who have worked or studied in China for more than one year
(1) Sales or pre-sales contract for the property;
(2) Identification certificates;
(3) Valid employment contract or study certificate for more than one year;
(4) Relevant certificates issued by the competent real estate authority regarding the registration and filing of the pre-sales contract of the property signed by the foreign individual.
III. LOANS
In addition, according to a statement issued by China’s National Development and Reform Commission in 2012, medium and long-term loans (i.e. loans exceeding one year in duration) given to foreigners by foreign banks for the purpose of home purchases will not be permitted. This statement applies to all foreign banks in China, which means foreign banks can no longer borrow money from overseas to provide edium and long-term loans to foreigners for the purposes of home purchases. However, such banks can still use their own funds to provide mortgages to foreigners. Alternatively, foreigners have the option of seeking home mortgages from domestic Chinese banks.
Reference
1.https://www.china-briefing.com/news/regulations-on-real-estate-property-purchases-by-foreigners-in-china/
2.https://resourcehub.bakermckenzie.com/en/resources/global-corporate-real-estate-guide/asia-pacific/china/topics/real-estate-law
3.https://www.mohurd.gov.cn/gongkai/zhengce/zhengcefilelib/200607/20060726_157771.html
