Shanghai further restricts speculation by limiting enterprises' ability to buy

Shanghai took a further step in its fight against housing speculation last night by stating that only qualified enterprises will be allowed to purchase new residential units.

Shanghai took a further step in its fight against housing speculation last night by stating that only qualified enterprises will be allowed to purchase new residential units in the city, following similar moves taken earlier in Xi'an, Changsha and Hangzhou.

Effective today, to be eligible for new home purchase, companies need to have been set up for at least five years, pay taxes totaling at least 1 million yuan (US$150,475) in Shanghai, and employ at least ten staff who have paid social security insurance and public housing provident funds within the company for at least five years, according to a statement posted on the official website of the Shanghai Housing and Urban-Rural Development Commission.

Enterprises that have paid taxes exceeding 5 million yuan in Shanghai are qualified to purchase new homes anyway.

Moreover, companies will be allowed to sell their residential property at least five years after purchase, compared with the previous requirement of three years, the commission said.

The latest tightening policy probably came after complaints made by some individual home buyers who got frustrated in their failed purchase attempts. Companies would often emerge as the final winners in the city's lottery-style system — in use since last August — to decide the order of purchasing rights at all new residential developments around the city.

Currently, there is no limit on the number of new homes a company can purchase in Shanghai, while individual buyers face very strict home-purchase restrictions.

Under the government-required lottery-like registration system, the success rate on some extremely popular projects stood at no more than 14 percent.

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