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China: Provisions on Real Estate Prices

(Apr. 20, 2011) On March 16, 2011, China's National Development and Reform Commission promulgated “Provisions on Clear Price Indication in Sales of Commercial Houses”; they will become effective on May 1 of this year. The stated goal of these provisions is to regulate prices in sales of both new and older houses while maintaining an open and transparent market and safeguarding the rights of both operators, defined as including real estate developers and agencies, and consumers. “Clear price indication” means that prices and other charges for each housing unit are to be made public. Failure to follow the rules and committing other types of fraud in housing prices could result in administrative punishment for the operators. (National Development and Reform Commission Promulgated the “Provisions on Clear Price Indication in Sales of Commercial Houses,” 12 ISINOLAW WEEKLY (Apr. 4-10, 2011), via email from [email protected]; Provisions on Clear Price Indication in the Sales of Commercial Houses [in Chinese], ISINOLAW online subscription database, Doc. No. 10111804 (last visited Apr. 15, 2011).)

The provisions require that a billboard, list, or catalog clearly stating the prices for housing units offered for sale be prominently displayed at the operator's place of business and give the contact information for any complaints. The operators may also use electronic information screens or other computerized methods, in addition to the original posting of price data, as long as the information given is consistent. (ISINOLAW WEEKLY, supra.)

In addition to listing the price, the signs must include the following information:

(1) the name of the real estate developer, information on the Advance Sale Permit [a government-issued permit to hold a sale], the nature of the land and the tenure of use, and the building location, plot ratio, landscaping ratio, and parking space ratio for the building;

(2) the type of building structure and the status of decoration of the building and of the provision of basic infrastructure services, including water, electricity, gas, heating, and communication;

(3) the number of units for sale in the same time period and how many of them have been sold and the room number, floor number, type of unit offered for sale, story in the building, floor area of the unit, and floor area of a shared space;

(4) percentage of any discounts offered and the requirements for enjoying those discounts; and

(5) other information as determined by relevant provincial officials of the area in which the housing is located. (Id.)

Operators are also required to indicate all charges to be collected for tax authorities, and whether a property management company has been hired and on what basis (including the standards for services such a company must meet). (Id.)

No sales are permitted at prices higher than those publicly posted, and no unlisted, extra charges may be applied. If the houses are to be sold based on floor area, the applicable unit price must also be indicated. All the units involved in one Advance Sale Permit must be listed for sale at one time and at consistent prices. (Id.)