Buying a house in Yunnan
An (American) friend of ours asked us about buying a house in Yunnan 1 , and I thought some of it might be useful so I’ve posted it. It’s all off the top of my head, just meant to give a few pointers, not a comprehensive guide or anything. Anyway, hope it helps…
AS A FOREIGNER…
buying a house in China there are certain restrictions. There was a law brought in last year to stop property speculation by foreign nationals (mainly aimed at Taiwanese, I believe), and so you now can only have one property in your name and prove that you’ve been in China over a year. Also, as far as I’m aware, you have to pay all the money up front in one go. Of course, you can avoid any extra hassle by putting all the paper work in someone else’s name if they’re a Chinese national.
If you are bringing in money from abroad, you can avoid the restriction on the amount that you can change into RMB by showing the State Administration of Foreign Exchange 2 your contract to buy the house and your passport, and filling out some paperwork.
OLD COURTYARD HOUSES
We really wanted a nice courtyard house, either Lijiang style or the Dali houses (the traditional Bai houses are four small courtyards around one large central courtyard, all in stone and wood, just fantastic). If you take a short walk in any village in the Dali valley you’ll find hundreds of beautiful contenders, usually tumbled down places covered in vines and giant cactus, with their own well and huge slabs of rock in the courtyard. They’d cost next to nothing to fix up, and put in a decent bathroom and kitchen.
However, the problem is that all these houses, and even Dali old town itself, falls under rural land laws – something called zhaijidi 3 , a “homestead land use right” that essentially means the rural population doesn’t own anything – the village committee agrees they can use a certain strip of land, and they can build on it, but the land is not theirs. They cannot legally rent or sell it. If the government decides to build a road through their front yard, they will get some compensation for the building, but that’s it. If you were Chinese, you would have to have a hukou that was registered to the village to be eligible for such land.
We had found a place, 600 plus metre two courtyard compound, covered in ivy, with a stream running through it for about RMB 300,000, just perfect. We debated about getting it, but then read in the local papers about a bloke in Guizhou who did the same thing – moved from the urban sprawl into his nice country house, did the place up, and in less than a year it had been reclaimed by the local government – he didn’t get a penny in compensation, as him living there in the first place was illegal. We decided not to risk it.
There are several ways around this. You can rent long term, say twenty years, if you find someone trustworthy. You will have to rebuild the house from scratch pretty much, put in your own septic tank, and if you’re a bit far out broadband may be a problem (but you’d be surprised). It’s not legal, but it’s unlikely anyone will know or care.
The other way is to find a way, with your connections, to change the paperwork “officially” into land ownership papers (tudizheng 4 ). However, if anybody smells a rat you still don’t really have a leg to stand on, and your house is gone. Which doesn’t give you much security.
The other problem with those rural properties is that with land reform, those nice courtyard houses actually belong to three or four families, all of whom seem to hate each others guts more often than not. Even when we enquired about renting it was a nightmare, with one lot off in Baoshan working, the other down the road but not willing to rent, the third in Xiaguan who’ll only sell, not rent, etc etc.
BUILD YOUR OWN
To be honest, most of the houses you will see in the countryside are in no way liveable, and would have to be built from scratch anyway. So there is a way to legally own land: It has to have been previously owned by the state directly, places like schools, tea plantations and factories. Local governments make a lot of money this way, usually through auctions (check the local newspapers), and you’ll have all the legal paperwork and no one can touch it. The problem is that these are huge chunks of land – the smallest we saw was 5 mu (over 30,000 sq m) and in 2005 the price of land inside Dali old town was RMB 600,000/mu (666m). Dali is growing so fast that land prices are soaring. By the end of 2006 in the old town one mu (land only) costs RMB 900,000.
So again, there are several ways to get round this. One is to get in with a real estate developer and when they come in to do a big deal with the local government to build a shopping centre or whatever, ask them to sign some land over to you. For example, a property developer we know did a deal in which they threw in an extra patch of (if I remember right) 500 sq m for just RMB 480,000 by the east gate. Which would be great, but for us still a bit pricy considering you’d have to build the house etc (rough guess to build a house from scratch: RMB 300,000). The other way is to get a few friends together and buy the huge chunk of land and divide it up. That’s what the Taiwanese do.
BUY A “VILLA” 5
You know the gated community deal, with guards etc. This is fully legal, you have the deeds to the house and the land, and no one is going to take it from you (I get paranoid about that). Also, because of a new law that came in last year stating no new villa projects after (June 2006??) will be ratified, villas have become a limited commodity. That means the price is going up fast. These places are pretty soulless and artificial, it’s not like staying in the villages with Tibetan neighbours and mixian round the corner. On the upside the security is good, which after living in the villages for a while may come as something of a relief. Being a fairly obvious target, we were robbed once and cleared out completely – they even took the 20 odd kilo bottle of natural gas and our shampoo. And later on we had our dog stolen – but everyone in the neighbourhood had had their dogs taken at one time or other. This all came as a bit of a shock after five years in Shanghai, where we never had any problems with theft at all, not even a pickpocket.
BUY A FLAT IN KUNMING
Cheap, out of the way, typical Chinese gongfang 6 goes for RMB 3-4000/sq m. A nice, modern flat in a better area is RMB 5-6000 /sq m. The most expensive real estate in the city is around Cuihu, where flats go for over RMB 10,000/sq m.
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As an update, I was talking to a bloke involved in real estate last night, and the Taiwan villages way of buying property (getting a group of likeminded people together to purchase a big piece of land, then dividing it up and building individual houses) is no longer feasible, it seems. As of the beginning of this year, the laws have become much more strict…
Ten years ago, the Taiwan village (near the golf course) in Dali was bought for RMB 20,000 [USD 2,500] per mu [667 sq m], and today the same land is worth well over twenty times that. It is still possible to buy a stretch of land from local government, but it would have to be for a legitimate project or business (not residential), then you’d build the houses on the sly on part of that land. In Kunming, within the second ring road, the minimum for such projects is ten mu [0.7 hectares] of land, outside this area the minimum is 50 mu [3.35 hectares]. Just as an example, in Songming county (part of Kunming municipality), one mu [667 sq m] costs RMB 400,000, so a minimum 50 mu land deal would cost RMB 20 million, or USD 2.5 million. That’s a little on the pricey side for a big patch of grass, but Songming will be the site of the new Kunming airport and the city will spread in that direction, so that forces the price up.
If you go for something more obscure and rural, you can still buy land for next to nothing of course, and the more obscure and rural it is the more flexible are the regulations.
- Property speculation 炒房产 literally “stir-fry real estate”, the other law that came in last year to cool down real estate was a law limiting reselling to longer than five years – if you sell before the five year time period, the taxes are so high (I forget how much exactly) that you’ll lose money.
- the State Administration of Foreign Exchange 外汇管理局 with the reassuring acronym SAFE!
- zhaijidi, a “homesetead land use [right]” 宅基地
- Property ownership consists of two bits of paper, ownership of the land 土地证, actually a 70 year lease from the state but to all intents and purposes ownership, and the ownership of the building – 房产证.
- Villa 别墅 apart from the very luxurious ones, in any other country these would be an average detached or semi-detached (duplex) house.
- gongfang 公房 are those six storey concrete blocks of flats that were built by the state up to the nineties. Always a little squalid but with a lot of character, I get nostalgic about these places having spent years living in them – they seem to have a lot more personality than those modern tower blocks.
