Government Ministry Unveils Real Estate Social Credit System
To follow through on President Xi Jinping’s vow of “homes are for living, not for flipping”, China’s primary real estate regulator on Thursday announced penalties for companies which mislead customers and cheat on regulations designed to promote transparency in the nation’s residential housing market.
The announcement by the Ministry of Housing and Urban-Rural Development (MOHURD) listed 101 behaviors that would be considered as dishonest, with noncompliant developers, agents and financial institutions subject to a blacklist which is part of a credit record system that the ministry has established to help govern the sector.
The system, which is linked to the social credit framework that China is developing to monitor individuals’ behavior, aims to track companies’ adherence to MOHURD’s rules and to punish wrong-doers. “MOHURD has established a nationwide unified credit information sharing platform for housing market, which is connected with the National Credit Information Sharing Platform,” the real estate regulator said in the announcement.
For both developers and agents, behavior that would be considered as dishonest including publishing false listing information and advertisements — a ban which looks targeted at the common industry practice of creating underpriced fake listings to generate consumer inquiries.
Developers are also forbidden to practice sales bundling, such as requiring buyers to purchase overpriced decoration services or parking space together with new homes, as a way to circumvent price caps on home sales. The announcement also proscribes against developers keeping houses in stock once completed, rather than risk putting them on the market during periods of low demand.
Developers or brokers caught committing these real estate sins would be added to MOHURD’s blacklist, and in serious cases could be banned from future involvement in the sector.
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