Experts: Standardizing moves in sector to further unleash purchasing potential
Potential homebuyers look at property models during an expo in Chongqing. (PHOTO / CHINA NEWS SERVICE)
The recent guideline urging real estate brokerage agencies in China for reasonable reductions to fees for housing transactions and leasing services is expected to promote a healthier development of the sector and further unleash purchasing potential in the homebuying market, experts said.
Their comments came after China's Ministry of Housing and Urban-Rural Development and the State Administration for Market Regulation on Monday jointly issued a raft of regulatory measures on standardizing real estate brokerage services to protect the legitimate rights and interests of parties involved in related transactions.
The real estate sector has grown increasingly critical for China’s growth and development, with property transactions … relying on real estate agencies.
Li Yujia, researcher with the Guangdong Urban & Rural Planning and Design Institute
These regulatory measures cover real estate brokerage agencies' transaction behavior in 10 fields, including the registration of institutions and brokers, determination of service charges and the protection of personal information.
Specifically, it was made clear that brokerage service charges should be determined through negotiations by all parties involved in the transactions, taking into account factors such as service content, quality and market supply and demand, said the guideline.
Some real estate brokers in recent years "have charged excessive, unclear and bound fees, and misused clients' personal information, which has increased the burden on related parties and infringed their legal rights", as noted in the guideline.
Yin Changfeng, a real estate professor at Hefei University in Anhui province, said the guideline comes out at a time when the recovery of the real estate sector in the first quarter still missed expectations and is likely to energize the property market by regulating and bringing down transaction costs.
"The brokerage service charges are running high in major metropolises such as Beijing, Shanghai, and Guangzhou and Shenzhen in Guangdong province, and in some cities, there can still be a certain monopoly, though things are getting better these days," Yin said. "The new regulatory approaches are expected to bring down transaction costs for consumers in big cities, making larger transactions possible."
The guideline urges brokerage institutions to reasonably reduce the costs of housing sales and rental services and to refrain from exploiting a dominant market position to charge high prices for their services.
Yin said that while transactions of secondhand homes are mostly heating up in big cities, where the prices of transaction services are also the highest, it's possible that the potential of the homebuying market in these cities can be further catalyzed by the issuance of the new guideline.
The guideline also forbids brokerage institutions and their employees to illegally collect, use, process and transmit or illegally trade, or provide and disclose personal information.
"The real estate sector has grown increasingly critical for China's growth and development, with property transactions, particularly the transaction of secondhand homes, severely relying on real estate agencies", said Li Yujia, a researcher at the housing policy research center of the Guangdong Urban & Rural Planning and Design Institute.
"The size of staff working in real estate agencies has been vastly expanding, as well as their areas of services," Li said. "Yet some agents are taking advantage of their scale to increase fees. Private personal information of clients is sometimes misused and their lawful rights and interests are infringed."
Li said he believes the new guideline will help rein in the cutthroat competition in the sector and promote healthier, sustainable development by better protecting all stakeholders in the process.
Yin said while the guideline will be conducive to the healthy development of the industry, "its specific and eventual impact on the homebuying market is likely to be city-specific".