Divorce, a way round China's second-home restrictions

16:39, May 13, 2010      

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Li Guoliang, 42, is planning to divorce his wife, not to end an unhappy marriage, but to buy a second home as China's house prices continue to skyrocket.

Li's decision came after the Chinese government imposed restrictions on a family purchasing a second home, in a bid to curb property speculation.

A divorce could reduce the couple's down payment by 140,000 yuan (20,505 U.S. dollars) and mortgage payments by 100,000 yuan, said Li, who is considering buying a 720,000 yuan second home for investment in Changsha, the capital of central Hunan Province.

In mid-April, the State Council, or the Cabinet, ordered banks nationwide to raise the down payment for a family to buy a second home to a minimum 50 percent of the value from 40 percent, with a mortgage rate no less than 1.1 times the benchmark interest rate.

"After we get divorced, my wife will claim our house, so that I can apply for a mortgage as a first-home buyer since I don't have a house under my name. And we will remarry after that," Li said, adding that he got the idea from a real estate agency.

The new regulation allows first-home buyers to pay a minimum 30 percent of the property price if the apartment is 90 square meters or larger.

Li and his wife are among many couples planning on getting a divorce to circumvent the government's restrictions on second-home purchases.

"Such a 'fake' divorce may save the second-home buyer hundreds of thousands of yuan. So, why not do it?" said Chen Ping, a real estate agent in Changsha.

Chen said he had helped many couples apply for the preferential mortgage for the first-home buyer through a "fake divorce," which was "legitimate and viable, just like reasonable tax avoidance."

"In the two weeks after the new rules were introduced, I received 16 clients hoping to get a favorable loan by getting a divorce," said Li Yi, a lawyer with Tenghui Law Office in Chongqing Municipality.

"It's people's choice to get married or divorced," said a worker with the marriage registration office of the Changsha City Bureau of Civil Administration. "We have no right to interfere, no matter what reason they did it for."

Although such a "fake divorce" itself doesn't break any laws, people should be aware of the potential risks, said Feng Kun, a lawyer with the Changsha-based Xiangsheng Law Office.

"What if your spouse changes his or her mind and refuses to remarry? It would be a big blow," Feng said.

There is no concept of "fake divorce" in the eyes of the law. Once divorced, the division of property on the divorce agreement is legally binding, Feng said.

The divorce ruse is widely despised by many others as it violates the Chinese traditional view of marriage.

According to a poll held by the Chongqing Evening News earlier this month, 309 out of 388 surveyed citizens said they would not seek divorce to buy a cheaper second home.

"I won't sacrifice the happiness of my family for a cheaper house. It's not worth it." said Liu Zhiming, a resident in Chongqing and also the father of a three-year-old boy.

Liu's opinion was shared by Zhong Xiaowen, an employee of a state-owned company in Beijing. "The trick profanes holy marriage," she said.



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