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Thinking of moving to China, or perhaps investing there? Read on, as we’ve put together a useful guide to buying property in China as a foreigner.
This includes whether US citizens are allowed to buy property in China, along with a guide to the purchasing process. Plus, the cost of Chinese real estate in major cities, plus associated fees and taxes.
We’ll also show you a smart and secure way to pay for overseas property purchases too, using Wise.
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The most common reason for US citizens to buy property in China is because they plan to live there. If you’re moving abroad, finding somewhere to live will always be a top priority.
You might also want a convenient holiday home, or familiar place to stay if you go on regular business trips to China.
Lastly, you might be interested in investing in the Chinese property market. While it has been affected by the Covid-19 pandemic, like the rest of the Chinese economy, the housing market is slowly recovering. In May 2023, house prices grew by 12.5% year-on-year.¹
But as we’ll discover shortly, owning investment property in China may simply not be possible for foreign nationals.
The answer to this question is a little complex. In China, all land is legally owned by the state. However, when you buy property, you’re acquiring the right to lease it from the government.²
Leases typically last for a period of 70 years. After this time, it’s standard for leases to be renewed.²
But there are circumstances where this might not happen, as the Chinese Ministry of Housing and Construction can decide that your property (or land) is needed for redevelopment. You may receive compensation, but it could be a lot less than you paid for the property.
Yes, China does allow foreigners to buy property. But there are a few requirements you’ll need to meet as a US citizen venturing into the Chinese property market.
The main one is length of stay in the country. You’ll need to have lived in China for at least 12 months, working or studying on a valid permit.²
These are the country-wide rules, but there may also be other requirements depending on which region you’re looking to buy in.
For example, in Shanghai, you’ll need to submit copies of tax receipts for 12 of the past 24 months.²
If you’re buying in Beijing, you’ll need to prove that you’ve paid local taxes and social security contributions for at least the last five years.
In addition to the above, you also need to know what you are and aren’t allowed to do when purchasing property in China. Here are the key restrictions to be aware of:²
- You can only buy one property in China as a foreigner - second homes aren’t allowed
- The property you buy must be for living in
- You’re not allowed to rent out the property or act as a landlord.
If you’re able to meet the requirements we’ve looked at so far, you’re on track to buy your first property in China. But there may be another obstacle in your way - and this is the cost.
The cost of living in China is generally much cheaper than the US - in some cases, around 50% lower, depending which two cities you’re comparing. Renting a property is much more affordable too. But the situation is quite different when it comes to buying property.
Chinese real estate is on average around 80% more than in the US, based on buying an apartment in a city center. You can save money by purchasing outside of city centers, where property is unsurprisingly quite a lot cheaper. But even then, you’ll still be paying more than 50% more for a Chinese apartment than an equivalent property back home in the US.³
So, you’ll need to make sure you budget accordingly and have your finances in order.
To give you an idea of how much you’re likely to spend on buying a property in China, let’s take a look at some figures.
Here’s the average cost per square meter in USD for properties in popular Chinese cities, including apartments both in and outside of the city center:⁴
|City||Apartment price per sq.m - city center||Apartment price per sq.m - outside city center|
|Beijing||$16410 USD||$8078 USD|
|Shanghai||$17635 USD||$9468 USD|
|Shenzhen||$16858 USD||$7903 USD|
|Nanjing||$6824 USD||$3841 USD|
|Suzhou||$8661 USD||$4571 USD|
|Hangzhou||$7215 USD||$4241 USD|
|Chengdu||$3913 USD||$2098 USD|
In addition to the actual cost of purchasing the property, you’ll also need to budget for associated real estate fees.
Here’s what you can expect to pay in fees and taxes:²
- Deed tax - 3-6% of the selling price
- Transfer fees - 0.5%
- City maintenance and construction tax - 7%
- Notarization fees - 0.3%
All in all, these taxes and fees could add up to around 11% of the total selling price.
One less thing to worry about: pay for your international property through Wise
Now that you know about all the costs involved with buying property in China, the next step is to work out how you’ll pay them.
Sending money overseas for purchases like this can be expensive, thanks to high bank fees and poor exchange rates. But there is an alternative that could save you a bundle.
Wise offers a quick, low-cost and highly secure way of sending money to China— in just a few clicks.
You’ll get the mid-market exchange rate and know upfront how much each transaction will cost. You can also create recurring payments, so you don’t have to worry about setting up a new transaction for your CNY expenses each month.
Now, how do you go about actually purchasing a property in China? The first thing to do is get your finances in order.
As property prices are so high in China, you’re likely to need a mortgage. But to get one, you’ll need to be able to fund at least 30% of the purchase price yourself.
You may also find your mortgage provider options a little limited. Some Chinese banks only lend to people who are Chinese citizens, or who are married to Chinese nationals.
Your best option is to contact a few banks to find out their requirements. Then, take your signed and notarized paperwork to the bank, to find out what they can do for you.
With that process underway, here are the other steps to follow to purchase your chosen property:
This isn’t essential, but it’s enormously helpful if you’re a foreign buyer. A local agent can help you navigate the market, ensure you meet the requirements and find a property.
You’ll need this to start your property hunt, along with the details of what kind of property you’re looking for.
Your agent will arrange viewings of suitable properties, which you can do in person or your agent can handle for you.
Once you find the right property, your agent will help you negotiate on the price and other details.
This will contain all of the terms and conditions of the purchase.
Pay a percentage of the agreed purchase price as a deposit.
As you’re a foreign buyer, this will need to be notarized and the purchase approved by the government.
This step is required to have the property title transferred to your name. It can take a few weeks to come through.
As well as appointing a real estate agent, it could also be a good idea to seek some legal advice to assist you with your purchase.
Buying a property in China as a foreigner isn’t necessarily an easy process, nor is it cheap. You’ll need to make sure you have all your paperwork and your finances in order. But after reading this guide, you should have a much better idea of what to expect.
|💡 Read more about life in China in our helpful guides to opening a bank account and starting a business in the country.|
Sources used for this article:
- CEIC Data - China House Prices Growth
- Internations - China Expats Guide - Housing
- Numbeo - Cost of living - Compare US and China
- Numbeo - Cost of Living - Prices by city
Sources checked on 12-Jul-2023.
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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