HONG KONG—Chinese lawyers have warned couples against divorcing each other to get around stringent new limits on mortgage lending set by the country’s banking regulator.
The new regulations mandate that families seeking to acquire a first home will have to stump up 30 percent of the total price as a down payment, while those looking to acquire a second property will need to find at least half the selling price up front.
The rules have given rise to fears that married couples will file for divorce to circumvent tougher lending limits, which also limit how low an interest rate can be offered to those seeking a mortgage.
“Legally speaking, if you get a divorce certificate, then you are divorced,” Shenzhen-based family lawyer Wu Jianghua said. “There is no such thing as a fake divorce.”
Wu said couples going through a rocky patch might be encouraged to divorce to benefit from being treated as two separate households for lending purposes, instead of working through their problems.
The warning is a stark reminder of the enormous pressure on middle-class working families amid a massive housing boom in major Chinese cities that is putting a two-bedroom apartment out of the reach of many.
In new housing regulations announced April 15, the down payment requirement for a family purchasing a second house has been raised from 40 percent to 50 percent with the mortgage rate 1.1 times the benchmark interest rate.
A couple wanting to buy a second apartment worth 720,000 yuan (U.S.$105,500) would have to find an extra 150,000 yuan (U.S.$22,000) under the new rules, according to estimates by local media.
“Once they have got a divorce, then legally the two are considered separate and autonomous persons,” Wu said.
“Then there is the question of what happens after that, whether they remarry each other or not.”
Other lawyers have warned in media interviews that the economic losses from a divorce are likely to be far higher overall than the money saved in mortgage loans, should the "fake" divorces end up becoming a reality.
One Beijing-based property lawyer surnamed Meng said only a small minority of people appear to be taking this route.
“In any system there are always going to be some people who do things properly, and others who are doing something other than the mainstream,” Meng said.
“But they are in the minority.”
Shenzhen-based relationships expert Zheng Fan said he believes that a committed marriage was a bit more sacred than a good mortgage deal, however.
“I have run into a few cases where the husband and wife say they’ll divorce to benefit from preferential housing loans, and then when the time comes to re-marry afterwards, they have an emotional problem with doing that,” Zheng said.
“Before they divorced, of course they made out that it wasn’t for real ... but in fact I think that they had selfish motives, and that they weren’t that optimistic about the marriage,” he said.
“If someone—usually a woman—asks us our advice, we tell her that on no account should she do this, because it may be a pretense on the part of her husband.”
Lawyer Wu said couples shouldn’t take the step, because the government could realize there was a problem and change its policy accordingly.
“And how exactly are you going to divide the property of couples who choose to have this kind of fake divorce?” he said.
“This makes things very unclear about the assets involved.”
China’s booming property market has shown signs of cooling down in April after a range of government measures aimed at curb rocketing house prices.
Property prices surged a record 11.7 percent in March prompting complaints and intensified concerns about asset bubbles.
Properties sold in Hangzhou, capital of eastern Zhejiang province, saw a 72.55 percent month-on-month plunge during the week ending April 25.
Beijing witnessed a 45 percent fall, while in Shanghai the drop was 38 percent, according to the government-backed China Index Research Institute.
Original reporting in Mandarin by Wen Jian. Mandarin service director: Jennifer Chou. Translated and written for the Web in English by Luisetta Mudie. Edited by Sarah Jackson-Han.