By: EL Cheng
7 July 2018 15:41
Property flipping has been frequently used in the world. Flipping is defined as buying a property and reselling it to gain a profit within the shortest of time.
An individual can achieve this in many ways. One may purchase a unit of house that is still building and sell it when upon completion. One also can buy an abandoned house at a discounted price and renovate or refurbish the premise and sell it at a premium to gain profits. In some countries, people make a living by buying run-down houses and DIY renovation before reselling it.
It is also noted that flipping done on non-landed properties such as flats and condominium are less successful in terms of sales and profit. Whereas, landed homes and shop lots flipping has proved to be extremely successful during the 2008 and 2014.
To combat property flipping, the Chinese government has put in place two rules:
- Homeowners can only sell the unit after 5 years after the purchase date.
- Foreign buyers also cannot borrow more than 30 percent of the market value of the property from banks.
These rules are introduced to pair with another rule that restricts the purchase of more than one home by non-local resident provided they can prove that they have paid 1-year worth of taxes.
These rules and controls have been only place on larger cities with larger population but smaller cities in China has slowly adopted these rules and controls.
Is property flipping unethical or is it a form of seizing of opportunity?