China has eased a long-standing “payment dilemma” for overseas individuals purchasing onshore properties, simplifying cross-border investment and financing procedures.

Unveiled in mid-September by the State Administration of Foreign Exchange (SAFE), the new rule allows overseas buyers to use converted currency for down payments immediately after signing a purchase agreement, before submitting the home purchase registration certificate from Chinese real estate authorities.

Previously, the practice in many Chinese cities required buyers to first obtain a registration certificate before they could initiate a down payment. But sellers must collect the down payment before filing with real estate authorities, creating a Catch-22 for both parties.

This reform bridges the timing conflict between contract signing and currency conversion.

Li Bin, deputy director and spokesperson of SAFE, explained that to meet the housing purchase needs of overseas workers in China, SAFE will expand the policy, already implemented in the Guangdong-Hong Kong-Macao Greater Bay Area, nationwide.

At the beginning of 2024, Guangdong authorities took the lead in piloting the policy, further proposing a “one-stop” fund settlement system, making it so that Hong Kong and Macao residents can directly remit overseas home purchase funds into the real estate developer’s mainland account.

Li says the policy met with “positive responses and results” in the Greater Bay Area.

Foreign individuals have historically faced strict limits on purchasing property in China. A 2006 order specified that foreigners could only purchase property in China if they had studied or worked in China for at least a year. In 2010, the rules tightened further, restricting most foreigners to the purchase of a single property.

SAFE’s latest reform also lifts restrictions under China’s “negative list,” which had barred the use of certain foreign exchange income for residential properties used as assets and investments. Proceeds converted into yuan may now be spent more flexibly, broadening options for overseas individuals.

Property insiders say the reform marks both a major step in China’s opening up internationally and optimizing its business climate. And while they do not foresee a surge of foreign capital, they note how the streamlined payment process likely offers welcome relief for overseas individuals seeking to settle in China.

Editor: Marianne Gunnarsson.

(Header image: VCG)