In Shanghai, Couples Rush to Divorce to Buy Property Later

By Dominique Fong, Junya Qian and Yifan Xie/ Aug 29, 2016 / The Wall Street Journal

Splitting up often means selling the house. But Shanghai couples dashed to split up on Monday so they could buy.

Spouses were scrambling to cut ties, at least on paper, amid rumors that the city might soon shut a loophole that families often use to buy more property: divorce. The surge is a response to concerns about rising property prices and government efforts to slow the increase.

Under current rules, a family buying a second home is required to put a down payment of up to 70% while a first-time buyer needs to put up only 30%. Widespread rumors—denied late Monday by housing authorities—say the penalty would be extended to those recently divorced for one year.

Dozens of couples packed into Shanghai’s Xuhui District Divorce Registration Office to register divorces on Monday eager to break up. One woman, who gave her surname as Gu but declined to give her full name, said she was there to help her parents divorce after 35 years of marriage. The idea is to buy an apartment for the older couple that has an elevator, said Ms. Gu, and the divorce can help the “buyer” save on the down payment.

“We don’t have much money, so there’s no other way. The property price is so high that it’s unbearable for us,” Ms. Gu said. The divorce, she said, wouldn’t destroy her family, because her parents have a stable relationship.

A paper divorce has been a way to circumvent the current restrictions, allowing one of the recently divorced partners to qualify for the lower downpayment. Ms. Gu said she had been considering a paper divorce for her parents since April and accelerated the process after hearing the rumor.

By afternoon at the Xuhui divorce office, just one of the Shanghai district offices inundated with sudden demand for divorces on Monday, a sign had gone up asking applicants to return another day. The office, on the third floor of a government office near Shanghai’s South Station, said in the notice that the rush of applicants exceeded the center’s capacity. It asked registrants to return later “to ensure service quality and guarantee the normal of order of marriage registration window”—which is adjacent to the divorce office. Read more…

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