Local Governments Step Up Inspections of Real Estate Transactions


Local governments are further tightening their supervision and inspection of the real estate transactions at the prompting of Beijing’s Ministry of Housing and Urban-Rural Development.

Chongqing’s land department issued a directive on 17 May mandating the inspection of commercial property transactions within the downtown area for a total of 14 items, including hoarding for speculative purposes, price defrauding and “zero down payments.”

The Chongqing directive follows MOHURD’s release of a document on 30 March mandating that local government address the problem of the “three legal violations and the three regulatory breaches” to which real estate developers and intermediary companies are most susceptible.

These are described by MOHURD as being “firstly the monopolisation of housing resources and the manipulation of market prices; secondly the fabrication of rumours to generate contingencies and mislead market expectations, and thirdly the provision of false documentation to disrupt the market order.”

Chongqing is not alone in mandating heightened real estate inspection requirements in response to MOHURD’s mandate, with other local governments introducing similar measures including those of Hubei, Nanjing and Shanghai.

The Hubei province government issued a directive on 15 May requiring that developers and intermediaries address the nine forms of “inappropriate business conduct” in the local market, including sales without documentation and false filings.

According to industry observers much of the dubious behaviour in relation to real estate transactions has arisen from inadequate housing supply in hot spot urban centres, creating opportunities for unscrupulous profiteers.