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In China, "owning" a home abroad means something different than homeownership in the U.S. and many other countries. Yet for some expats, the idea of procuring Chinese property still holds a strong appeal - whether it's a matter of planting roots or making a wise foreign investment. Fortunately for these individuals, there may be an easier path to property acquisition than in years past.
"China has created a new environment for people in the U.S. and many other countries, to stay and live and work in China," says Dr. Hong Yang, lead consultant for Lurie Besikof Lapidus & Company's China Strategies, a Minneapolis-based firm and consultancy specializing in the region.
Still, Yang says, only about 0.8 percent of property in China is acquired by foreign citizens. That's "because [the] Chinese government has very, very strict rules that apply for foreign people to buy real estate properties in China - even now," he says. For starters, no one - not even Chinese citizens - can own property in China forever, because the government owns all property permanently, Yang says. Rather, they can purchase a leasehold for Chinese real estate, which runs for 70 years for residential property and 50 years for commercial property.
— Dr. Hong Yang, lead consultant for Lurie Besikof Lapidus & Co.’s China Strategies
Foreigners living in China who wish to enter the international real estate market face a host of legal restrictions. Before embarking on the process of acquiring a Chinese property, buyers should ensure they can meet some of the most basic requirements, such as:
Working with a real estate agent can help expats navigate China's complex requirements. "You're in much better hands if you have an agent," says Janet Carmosky, founder and CEO of the China Business Network, a marketplace for China business consulting and training services, and a faculty member at the Confucius Institute for Business at the State University of New York. "I wouldn't advise anybody to get into it by themselves. It is very, very complicated terrain. If you really want to buy property in China, work with an agent who specializes in working with foreign passport holders, and get references."
It's important to be aware that Chinese banks are restricted from lending to foreigners. Therefore mortgage applications must be initiated through international channels. "International banks also are the most reliable source of information on property prices, transactions prices, market trends and legal advice," says Ishbel Bruce, a Scottish expat who has lived in China since 1997 and partner of Beijing Balfour Technology Co. Ltd.
If international buyers need to initiate a money transfer to China for a down payment or make a monthly mortgage payment for their home abroad, they can use the services of a trusted online foreign exchange provider. In addition to the relevant resources these services offer, signing up for email market-rate alerts can make it easier for expats to go to their online FX accounts and secure the latest exchange rates when making large real estate-related payments.
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