Can the government take my home away when Land Use Rights expire? | China Real Estates


What is going on guys, this is Simon from Shanghai. Last week I have talked some of the issues
about China’s real estate, like whether the price is really too high and how do average
people afford them, so if you haven’t watched the video, definitely go check them out. After the video was posted, I saw some of
you guys ask more questions about the real estate in China, so let’s talk about some
of the popular ones this week. First question: in China, whether
there is an expiration date for the house that you bought. And if it does, what will happen after the
expiration date? First of all, Yes, there is an expiration
date for all private housing. In China, you need to know that according to our Constitution, land in cities is owned by the state, and land in the rural areas is owned by the state or by collective. Although average people cannot own land privately, they may obtain land-use rights for a number of years for a fee. so when you buy an apartment in China, you
only own the apartment, you don’t own the land on which the apartments are situated. Normally you buy a (brand New) apartment,
you will have 70-year’s right to use the land. So you guys probably will wonder, what will
happen after 70 years? Will the government just take it away? According to the Property Rights Law, after
the right expired, the owner of the apartment can renew the rights to use the land. However, the regulation doesn’t specify whether the government would charge another fee and if they do, how much will it be? You probably want to ask if there is no clear regulation, then what will happen to the land expired right now? Well, Actually, there was no private property
in China until 1988’s housing reform, which means that even the oldest private property
today will not expire until 2050. So we still got some time. Since the regulation will affect everyone
and have a huge impact on the entire real estate industry. I guess no official is willing to take the risk to finalize the regulation today. They would rather wait and let the successor deal with
it than making a risky move today. Personally, I won’t worry about it too much. There are two main reasons that I don’t think
the price for the renewal will be ridiculously high. Reason No. 1, in China, You need to understand the biggest enemy of the government is social instability. The government will do anything, literally
anything to ensure the stability of society. Suppose they decide to charge a huge amount
of money for renewal. what will happen? It will have a very negative impact on the
housing price. Because if people still need to pay a huge
amount of money after they bought it, then why do people buy it in the first place? Why not just rent a place? The housing price will definitely crash and
the whole economy will crumble, which will be the worst thing our government wants to
see. Reason No. 2, guess who owns the majority
of the apartments? average people? no. Moving on, Let’s talk about the second question. When the government plans to take your house
or apartment away, do they give enough compensation? Well, it’s not easy to answer. Let me just give you a little bit of background
before addressing the question. For the last decades, urbanization has always
been one of our government’s top agenda items. During the process of urbanization, of course,
a lot of times the government will need to take the land back from people so they can
build different kinds of public infrastructure, such as elevated roads, subways, shopping
center, etc, etc. After the government takes the land, usually
there are two types of compensation for the people who used to live there to choose. The first option, you can choose to move into
the apartment building built by the local government. The second option, you can also choose to
get money and buy apartments by yourself. Generally speaking, except for some local
residents who really miss their old house, most of the people are willing to cooperate
with the government as long as they got enough compensation. Why? Because most housing conditions in rural China
are pretty bad. I have been to the United Kingdom last year,
I saw places like this and this. I am amazed by the quality of the house in
rural England. However, in China, most of the time you only
see this. Therefore, most people are willing to accept
the relocation program as long as they get a fair deal. Although the quality of the newly built apartment
building is also sometimes questionable, at least it’s better than the old house. When you read the news about the people who
refuse to move, there are mainly two possible scenarios. Scenario 1
Although we have laws which require the local governments to give fair compensation to the
residents, a lot of times due to greed and corruption, the person who is in charge of
the relocation will try to minimize the compensation for the local residents and sometimes hire
part-time securities to force the people to move. Scenario 2,
The compensation the local residents are asking for is much higher than the market value of
the house, which beyond the government’s budget. If the future project on the land is very
important, say building an Olympic stadium, then the government probably gonna move them
anyway, if the project can be adjusted, then you may see something like this. So, it is virtually impossible to generalize
whether the government gives fair compensation because each case is different. In Shanghai, I can tell you that many local
people are looking forward to getting relocation because the compensation is actually quite
a lot. Take one of my friends as an example, he was
the local resident of a small village in Shanghai. The local government took his house, in return,
they gave him three apartments as compensation, now each of them is worth more than 500,000
dollars. In Shanghai, relocation is one of the fastest
ways and maybe the only way for local average people to become rich. Some of you may see old aunties in high-end
shopping centers buying Gucci, LV bag, you may wonder, they don’t look like they know
how to make a lot of money, but how do they become so rich? well, now you have part of the answer. Of course, not every aunty become rich by
relocation, there are many other ways to become a rich auntie in China, but that’s not the
focus of today’s topic, I will cover that in the future video. Nevertheless, in some small cities, relocation
may not be a very pleasant experience. Take my grandparents’ old house as an example. The house is located in a small village in
Suzhou City. Near the village, there are several factories. So a lot of local villagers rent their house
to the factory workers in order to get some extra money, that’s common right. Last year, the local government decided to
take the land and to relocate everybody in the village to somewhere else. However, before signing any documents, they
told every single family in the village that hey, we are going to take the land soon, you
can’t rent out your place anymore. Then they hire a bunch of security guys to
guard the entrance of the village. When people want to get inside, they need
to show their id. If you are not the local resident, then you
are not allowed to get inside the village anymore. So, all local villagers were forced to stop
renting their places to outsiders. Is it legal for the local government to do
it? I don’t think so, because technically the
villager still owns their house if they haven’t signed the contract yet, right? but no one
wants to mess with the local government, So, it is what it is. Although nowadays, the local government can’t
force you to move, they can find ways to make your living very uncomfortable, so eventually,
you have to agree with their relocation program. Third question, can foreigner buy China’s
property? Yes, you can, however, there is probably some
requirement that you need to pass before being allowed to buy a property and each city will
be different. In Shanghai, You need to live here for more
than 1 year and have a valid working visa, then you should be able to buy a property
in the city. But seriously, why do you do it? please don’t. Oh, 1 more thing, in China, we do pay some
tax when we buy the apartment, but currently, there is no annual property tax. I believe in some state in the US, the property
tax is like 1%. which means if you buy a million dollars apartment,
you need to pay 10 grand every year right? WOW, that’s a lot of money. I can tell you In China, a lot of people who
own 1 million dollar house earn less than 10 grand per year, which means his entire
salary won’t even be able to cover the property tax. I can’t imagine if China starts collecting
property tax, that’s going to be a nightmare. I wonder if every country is like that. I think that’s pretty much it for today’s
video. I know There are many other things I haven’t
covered. you have more question, you can post it under
the comment section. Okay, if you like my video, please hit the
thumbs up button, if you want more content about China from an average Chinese guy, please
subscribe to my Chanel, once again, Thank you so much for all the love and support,
I will catch you next time. Peace




Comments
  1. I'm sure there is property tax in most(if not all) of Europa.
    And yes a lot of people are getting burnt by houses they cant sell yet have to pay taxes for.

  2. Ha! At the end of the video I asked myself "Why is he walking so strangely?". It took a second for me to notice how everyone else was walking!. Thanks for the great vids Simon. I appreciate your perspective.

  3. Thank you for this interesting and informative clip.
    The high quality of the production enhances the entire experience.
    Subscribed to the channel.
    Greetings from Sweden.

  4. I have a question: How they don't censor chinese youtubers, who makes these good reports that should definitely annoy chinese propaganda.
    Cause maybe very few mainlander chinese can see youtube or understand English and so this is not so "dangerous" for them ?
    I think they would definitely not allow anyone to talk like this on Weibo or other chinese social media, am I right ?

  5. Thank you for telling us about how property ownership works in China. And for that amazing last shot 😉

  6. I love the detail of your advice Simon. It's very honest and simply explained. Great work! 👍👍👍👍

  7. Is that a phone in your hand? And what was that trolly looking thing going down the road? How much does it cost to ride? Can a person just hop on the thing, and ride around?

  8. Nice Ending of the Video! I'm sure people were looking weirdly at someone walking backwards XD. But it was worth it.

  9. Great video Simon ! It is a bit sad when these people have to leave their properties, where they spent their whole life, but hopefully the new apartments they get have better quality as they are brand new.

    Enjoy your Nanjing Road strolls ^_^

  10. Keep making these videos. I'm looking forward to your video on rich aunties Haha. Many news of China comes through some filters so good to have a real Chinese person give their views

  11. When I lived in Ottawa, Canada, my house tax (which included the school tax) was about 2% of the value of the house, every year. Where I am not it is less, but then I live in the middle of nowhere with no services.

  12. In Western economies taxes do add cost. But they pay for local services and are normally less than 1%. In addition those taxes are only local and are voted on by the people in that local area. And after 70 years they still fully own the property which, due to inflation alone, will be worth multiples of the original purchase price. It never needs to be "repurchased". And their children's children can own it after that. In other words a citizen can retain both the ownership and the value. In the CCP system renting from the government is the only real option. And the bubble now being financed, created and supported only by government actions cannot be financially sustained. Because of that I'm worried for the financial futures of both China and the world. Once again, why do Chinese officials and business leaders buy Western real estate? They are not stupid.

  13. I'm in England. I agree our rural housing is good quality. But our homeless problem is horrific under this capitalist system. People are dying on the streets of the UK.

  14. simon, please cover sensitive topic about military and civil unrest, some people from around the world are really nervous about it. You know, about Taiwan, or South China Sea.

  15. On property tax in the US. I live in Chicago and Illinois has some of the highest property taxes in the country. For example a 1k sqft home runs about $5k a year. I have a small industrial property that’s 5k sqft I was paying up to $26k a year, I’ve managed to fight it down to $15k currently. A friends house in a decent suburb was $18k a year for 3200 sqft, his house at the time was valued at $800k

  16. Would be interested in insurance in China. Here in Florida I have a house so- Flood Insurance ( we are 6 ft above high tide) , House Insurance for wind damage ( hurricane area), fire, dog bite, slip and fall by visitors, broken pipe water damage, etc. Car insurance, my being hurt ,the other people being hurt and damage to the autos,
    Health insurance( very expensive) complete coverage, Death insurance- lump sum payout.

  17. What is your view on the real estate market in China ? I heard that there was a lot of over construction and thus a housing bubble had formed.

  18. In Italy property tax is applied only to people who own more than one house . Those who own only one house do not pay property tax

  19. In US, the township/city you live in sets a property tax. Depending where you live, tax rates differ. In NJ, it's really high because it's more desirable to live in NJ and the public schools. But rural areas or less attractive areas, have lower property tax.

    If you can afford a 1 million house in US, then you must have high salary to pay $10000 tax or else bank won't give you mortgage loan, 10000 is not that much. In China, if as you say, doesn't make $10K/year, but has million dollar house, he/she probably owned or got when cheap, then value of property skyrocket. That person didn't buy it at 1 million, but maybe started low, then raised to 1 million. The salary of buyers should also go up to be able to buy house. But house price up faster than salary increase…hence unaffordable homes for many people.

    Property tax is mechanism to help control property price. This is one reason for China's real estate bubble. (plus lack of investing options in China). Taiwan has this problem too and it hurts the young people a lot. Raising property tax helps bring down and control property price. I read China has done this in some cases which seems rational and I think is right way to go to help average Chinese. Most Western developed countries I know are like this. But even in West, property is still big issue, just not as big problem in China.

  20. Excellent video. Please keep telling us about中国 from the perspective of the average Chinese person.

  21. Can you do a video on the social credit system? Have been hearing a lot about it, but i would like to know the opinion of a chinese person on this topic.

  22. thanks Simon, dont know if you can or are willing to talk about the 'papers' that were exposed in the not so distant past. Im sure that has a lot to do with real estate issues happening in developed countries

  23. Thanks for the video, it was an interesting topic, and nicely edited.
    In the u.s. some states like Texas have zero income tax, so they get revenue from property taxes.
    Can you tell where in China are you from? And how did you learn English (Which is great by the way)?
    Also many times I hear Chinese media boasting about the massive infrastructure investments in China, What do you think about the infrastructure? And what do average Chinese people think about it? Is it any good?
    I would like to visit China one day.
    Thanks again for the video, I hope to see more videos from you.
    Thanks again for the video

  24. The problem, is how is the building when is going to have 70 year's ? My building in Guangzhou is 10 year's and it's look like he have 30 year's, and the property manager is the number 1 in China !
    It was my job in my country, meeting with the owner, fix the fee each one, fix problem everywhere in the property. But here is catastrophique, no maintenance, 90% of fire door are broken, few neighbor on the last floor a leak from the roof, and they fix how ? with a aluminium foil !
    My advice if you dont want to loose money, sell your property when is 20 year's old, and buy a new one.

  25. Another great video! Would love to see continued videos about Real Estate in China. Keep sharing Simon's channel everyone! Great stuff!

  26. There are 2 types of property tax in Taiwan, land and house.
    A family can claim one house as “self resident accommodation” and get a discounted tax. It’s about 1/5 of the regular tax rate.

  27. Simon, you have made another awesome video my friend. keep up the good work! the backwards shot at the end was great!!!

  28. I appreciate your insights on modern China, it is rare to have someone speak openly and honestly about the country they love. I hope that you are not percicuted for having an opinion. I really enjoy your video's. Keep up the good work. Cheers.

  29. I guess we will all see what happens when these same leases expire in Hong Kong. The Chinese government will have to come up with a plan by the. Oh, yes you can by "forever title" property in China, but they are quite expensive. Buying these gives you a certificate of title, and not a 70 year lease title. I live in Binyang, Guangxi and there are many properties like this for sale, complete with a newly built multi storey house for around a million RMB.

  30. Dude you are a great speaker about these kind of topics. I would suggest putting the links for your sources in the description area? I would like to see the articles that you have listed (both in english and chinese)

  31. Kind of went off a bit on Simon privious video on irony of Winston's sending viewers to his way! Been watching those guy when they only have Simon # of viewers! I stated there it's very hard to reconcile two cultures! They insisted they're 100% fair because they tell the truths! Sort of like blind men and the elephant! I'm showing you the legs there for is the whole picture! I never have any information Simon provided I got in two days in two years! I watch those guys! STORY TIME! "China" a 200 pound toddler alway throw it's weight around it's teenge sister "Taiwan" and also deci
    ded to "stand up" to the grown guy around the block call "USA"! "China"got bold (thinking to himself you're F up, I can have my way now) after grown guy came to his house for bandage after a fall ( Henry Paulson went to Beijing borrow 300 billions for 800 billions bank bail out FYI)
    But he recovered and going to the toddler's house to tell him to behave, but toddler say "don't tell me what to do!" STORY TO BE CONTINUED. Hope Simon will keep doing what he's doing and no one mess with him! I need a little balance after watching ADV guys and get depressed!

  32. Again I really liked the backgrounds/scenery in your videos. You've got everything from busy public squares to quiet residential areas where you can hear the birds chirping.

  33. where do you (or a local Chinese) go to in vacations? (meaning locally, not abroad), videos of such places would be nice

  34. What will happen after 80 years? Actually, the quality of residential buildings in China are so poor they won't last over 30 years. These old buildings are considered dangerous and you have to "update" to a new apartment. In my residential area, buildings over 10 years old look dirty and like slums.

  35. I visited China in May 2019 and was shocked at how advanced the first tier cities are (more advanced than any city in the US). That brought up many questions on how people can afford housing based on the average income. Looking at the kind of cars they drive it seems many are wealthy. I found that people are pretty nice in China and I can see how Western and Eastern thinking is very different. Still for the most part American born Asians help their children if they need financial help.

  36. 🤔🤔🤔 interesting, i thought property tax is very common in the world, because it is one of the income for government. yes, i heard all type of stories abt relocation and the local government. But it need a change within the system itself, at least i agree sometimes the implementation just quite impersonal. In the same time in certain case, sometimes i cannot blame them when the owner was given a foot, but want a mile.

  37. the last way… when you talk about local government make your living discomfortable…
    seems also related to workplace…
    when the company really want to kick you out but dont want to do it themselves…
    they usually sent those people to do some unpleasant job…
    and most of them resign…

  38. In the UK, domestic property is taxed in five bands (A-E) where the exact levels are set by the local authority, but subject to limits set by the government. For a middle-size family home, the usual amount is about £1500-2000 per year, with 25% reduction for single occupancy, zero for students, zero or a nominal amount for unoccupied, and varying amounts extra for holiday homes. This tax is called Council Tax. Business premises are charged under a different system , called the Uniform Business Rate, which depends on the market rental value, subject to periodic revaluation.

  39. The United States has something called eminent domain where they can come and take your land supposedly for the public good and pay you whatever they feel like paying you. It's supposed to be for public infrastructure projects but lately they are taking it to benefit private businesses. You can fight it in court and put it off possibly for years but in the end they will win and it would have cost you a fortune to fight it.

    Property taxes in the United States vary by state, County and town.
    Here in New Jersey my $300,000 house is $10,000 a year in property taxes. But it is not unheard of for people to be paying $25,000 or $30,000 per year in property taxes in New Jersey four houses that are worth less than 1 million dollars.

  40. Why are rural China's houses so miserable compared to many other countries? is it also due tot he fact people dont own private land? Therefore they dont invest in good housing?

  41. if the Chinese gov. allowed people from out side of the country to buy land, it would fill up your ghost citys and it would pull china out of dept. however I feel that china would rather keep the people poor then have to give up control and solve many other problems. I found a 7 million doller shanghai castel that I was willing to buy so I had a nice home while I lived out there. however, if im going to spend 7million dollars before I even move to the country with out being able to own it… will im not going to move there. I spent the money in south korea. im there 5 months a year and love every min. of it. In 2 years im going to move there perm.

  42. It's the idiotic dictatorial Chinese regime. Taking away land from the people and other nations is what it naturally does. Don't expect anything positive to happen, especially if you're poor and have no connections.

  43. He skips over a lot of unfortunate facts of relocating village people into big cities and how poorly they adapt afterwards. It sounds like he's repeating a lot of filtered and propagandized information. Not his fault, i think. But still important to remember he isn't reading between the lines on each piece of information he gives.

  44. My wife’s sister (Beijing people) was given two apartments in Beijing for her village home and some money. I thought this was a great deal. (But the sister wanted more money)

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