Shanghai File photo: VCG

The housing department of Shanghai Municipality released a new housing policy on Thursday, which clarified that Shanghai will strictly implement its housing purchase restriction policy, including purchase limit on divorced couples and prudent management of personal housing loans. 

Couples who purchase commercial houses within 3 years from the date of their divorce, will have to declare the number of homes they collectively owned before their divorce, as Shanghai has set a limit on the number of homes an individual can own, according to the new policy published by Shanghai Municipal Housing and Urban-Rural Development Administration Commission that will take effect on Friday.

Analysts said the policy targets fake divorces, in which couples separate only so they can qualify to purchase an additional home.

"The introduction of the policy is a direct response to previous overheated housing prices in Shanghai, and in a timely and comprehensive manner to cover land, purchase restrictions, credit, taxes and fees, and fully demonstrating Shanghai's commitment to stabilizing housing prices. The specific article on divorce is a crackdown on fake divorces," Yan Yuejin, research director at Shanghai-based E-house China R&D Institute, told the Global Times on Thursday.

The new policy also increases the ownership period from two to five years before being exempt from paying a value-added tax (VAT) on the sale of a person's home. 

"The policy increases the transaction tax on second-hand houses, which helps to promote the stability of second-hand house transactions. The policy also said that land supply should be increased, which is consistent with the current housing demand in Shanghai, and can really alleviate the contradiction between supply and demand," Yan added.

Another real-estate analyst based in Shanghai said that the core of the policy is to increase the supply of residential land.

"Some said that Shanghai has entered the stock housing market, which is false. Shanghai needs to be an incremental market to accommodate more people pouring into the city, especially overseas Chinese, as the pandemic hit employment abroad," said the analyst.