China’s first-home buyers, desperate to get on the property ladder, are hoodwinked into signing away their recourse rights
- Buyers are asked to sign agreements promising they won’t complain in the event their new home is not up to scratch
- Price cap introduced in a bid to tame runaway house prices has exacerbated the problem, with developers’ profit margins under greater pressure than ever
It was ninth time lucky for Frank Chen when he finally secured his dream home, an 89-square-metre (958 square feet) flat under construction in northern Hangzhou.
After eight failed attempts, the 33-year-old defied the odds in January and was drawn from the hat in a public property lottery – a common method of allocating units in oversubscribed housing projects in China.
He was about to hand over the deposit on his 2,492,000 yuan (US$371,000) home when, to his surprise, the developer asked him to sign an agreement promising he would not complain in the event his new home did not meet his quality expectations on completion. Violating this condition would cost him 1 per cent of the value of the apartment – in this case, about 25,000 yuan.
He and some other buyers faced with the same request pushed back, taking their case to the local housing authority. They eventually forced the builder to back down and withdraw the requirement.
But the experience did not exactly fill them with confidence.
What can you expect when they tell you to sign such terms in the first place? I only hope the apartment won’t collapse
“What can you expect when they tell you to sign such terms in the first place? I only hope the apartment won’t collapse,” said Chen, who works in the technology sector.
