Courtyards purchase procedure and related needed information

New issue:

According to the new regulation, the foreigner could only purchase the property in Beijing if the stay in period in China was over one year. The foreigner, Hongkongnise, Macaunise and Taiwannise can purchase only one property. Before purchase, the buyer needs to do the application at the Beijing Public Security Bureau Exit-Entry Administration Bureau and shall sign the Self- Use only confirmation letter. The property bureau could only accept the title transfer application after the buyer obtaining the approval from the Beijing Public Security Bureau Exit-Entry Administration Bureau. （This regulation will be suspended from January 1^st  to December 31^st, 2009.）

Following please see some information related to an investment in Beijing for your reference.

For a foreigner to purchase a new property or a second hand property in Beijing, the regulation and tax are the same as the Chinese purchaser. The foreign purchaser needs  to do one Chinese name notarization and passport translation notarization. The cost is around RMB500. It is better to have several copies for future usage. One additional copy is RMB10. The name on your property license shall have your passport name and your Chinese name.

For purchase a courtyards is more like to purchase a piece of land. The price we proposed per sqm is also based on the land area. The property normally is too old and too poor, you shall need to have it re-built. The property re-construction shall do the application and send a construction plan to the GuiHua Bureau after you obtaining the property license. The re-build size has to be the same as the size stated in the property license or 50% to the land area. The courtyards have the supply of cold water, sewage system and electricity. No nature gas supply yet. The re-construction work can solve the shortage and the facility after renovation is same as high standard villa.  Some courtyards have long history and some old features left. You could have it re-stalled and keep the historical value.

The courtyards some are protected, some not. For the protected courtyards, no one can have it polled down. For courtyards not in the protected area, It has a risk, but the compensation of removing is also getting high in now days.

The highly protected courtyards are not allowed to re-build; some even not allow to sell to the foreigners.

For purchase a courtyard, the title transfer has to transfer the land license first, if the seller has no land license, he or she has to apply and obtain the land license first. For apply the land license, the government charge the land use fee is around RMb2000/sqm land area. It takes 4 months to have it ready. Only after land license transaction, then do the property license transaction. The property license takes 20 working days. There are some measurements fee will be charged during the application of land license, property license and the re-construction plan.

Some courtyards have many owners. Each of them owns around 30 sqm gross area, you have to make sure they all for sale and you can purchase an entire courtyards. And some courtyards are with the special tenants. They pay very little rental. And they have the staying right for ever. For these tenants, you have to make sure all of them are signed the removing agreement and received the compensation money or they accepted to move to another similar residential. Otherwise even your obtained the land license and the property license, the tenants still have the right to stay in and you have to work on how to move them out.

After choosing an ideal courtyard, you shall need to do the application for security check before purchase.

For taking a mortgage, The HSBC and Bank of Asia and etc can do the service; the courtyards mortgage in local bank is not available yet. And most of the courtyards owners are not accepted the payment condition issued by the foreign bank.

To purchase a courtyard is also as purchase a second hand property as all the courtyards are individual or company owned， But more complicated and the shall take more time for completion. The procedures are as follows（WGD’s professionals shall assist you do the purchase before, during and after the property title transfer）:

1) Advised by your investment agent-WGD Real Estate to selecting the valuable properties.

2) Select the right properties. If the courtyards located within 500 meters away to the government officer’s property, normally could only sell to the local purchaser. 

3）Pay a visit.

4) Negotiation the prices and payment issues.

5) Read the Sale and Purchase contract.

5) Consult the appointed lawyer for the safe title transaction.

6) Sign the format sale and purchase contract through the real estate bureau.

7）Do the payment according to the signed Sale and Purchase Contract.

8) Hand over the property to the purchase.

9) Do the title transfer (The transaction is shortened to 7-10 working days). For the title transfer, we need to ask the seller to go to the Tax Bureau to pay the related taxes and get a receipt. If the seller’s situation is tax free, then the seller needs to get a tax free letter from the Tax Bureau. After paying the tax or obtain the tax free letter, then the Real Estate Bureau shall accept the title transfer application.

The related fees to the purchaser are:

Land usage fee: around RMB2000/sqm land area.

Property tax: 3% of the purchasing price (RMB 9,300/sqm up), 1% of the purchasing price (RMB 9,300/sqm under, the property’s size has to be under 147sqm.)

Land tax (for the size above 147sqm): 3% of the purchasing price。

Stamp tax: 0.05% of the purchasing price

Lawyer fee: around RMB 5,000

Agent service fee: 2.5% of the purchasing price

Notarization fee: Around RMB1000

If taking a mortgage:

Registration fee: around 0.5% to 1% of the loan amount.

You could get a 60% to 70% mortgage at the foreign bank (USD loan or RMB loan) or some Chinese bank (USD loan or RMB loan).

For leasing out, you need to pay the agent fee equal to one month rental. For receiving the rental, you could open an individual (RMB & USD) account at any bank with your passport. The tenant can remit the rental to your account directly. You shall pay 5% rental tax to the tax bureau to obtain an official receipt. WGD Real Estate shall apply this for you.

If you are not in China or no time to deal with the leasing issues, you could authorize Beijing WGD Real Estate Company to manage your property, such as looking for a tenant, contract management, asset management and lease management. The service fee is around 2% of the monthly rental. If the property is vacant, the management fee shall be according to the marketing rental.

For taking the rental out of China, you shall provide the contract and the tax receipt. Your authorized agent-Beijing WGD Real Estate Company shall do this for you.

For sell a courtyards property, the seller needs to pay the following fees（WGD’s professionals shall assist you do the purchase before, during and after the property title transfer）:

Stamp tax: 0.05% of the selling price

Agent fee: 2% of the selling price.  

Lawyer fee: around RMB 5,000

Business tax: 5.5% of the selling price if to sell within two years after obtaining your property licenses. 5.5% of the business tax for the gain value part over two years after obtaining your property licenses (No tax if obtaining property licenses over two years and the property size is under 144sqm.).

Land value gain tax: For the property which has the gain value for the sale. The individual owned shall pay 1% of the selling price. For company owned courtyards, the tax has several levels, the lowest is 20% of the gain value.

Individual tax: 20% of the profit part, the renovation fee can take 10% of the tax free. For individual owned property, you can also choose to pay the tax by 1% of the selling price.

For more information related to an investment, please check our website at www.wgdrealestate.com.cn or send your request to investment@wgdrealestate.com.cn . WGD’s investment professionals shall answer all your needed information within one day.