China's Presale Overhaul Reaches Seven Cities as Shenzhen Caps Home Deposits at 3 Percent

Shenzhen and Hangzhou published their implementation rules for China's commodity housing sales overhaul on 15 October, completing the rollout across all four first-tier cities and taking the number of cities with local rules to seven. Shenzhen's version blocks a presale permit until a residential building reaches full structural topping-out, caps the deposit a developer may collect at 3 percent of the total purchase price, and lets buyers cancel a deposit contract and recover their money if the developer misses the delivery date.

What it means for a foreign buyer

If you are buying a new-build apartment in Shenzhen, the risk you were carrying has changed shape. A presale permit used to be available early in construction, which meant paying for a building that existed as a foundation and a sales gallery, with delivery risk sitting with you. On land whose sale announcement was published after 28 August, the roof concrete now has to be poured and a main structure acceptance record signed and sealed by four parties before anything can be sold off-plan. The deposit you can be asked for is capped at 3 percent of the price, against 5 percent in Guangzhou and Hangzhou, and if delivery slips you can terminate the deposit contract, recover the deposit and leave the contractual liability with the developer.

The trade-off is price and choice. A developer selling a topped-out building is selling a safer product, so the discount that compensated you for carrying construction risk shrinks, and the stock marketable in any given quarter in the strictest cities thins out. Establish which rule your project falls under before you negotiate, because the cutoff is the land sale announcement date, not the sales launch. Shenzhen runs a transition period to 31 December 2027, and Hangzhou lets projects on land acquired before 28 August apply for presale on the original conditions until the end of 2028.

Ask for the land sale announcement date in writing before you pay a deposit.

What changed

Shenzhen took the tighter path. Deposits are generally capped at 3 percent of the total purchase price, matching Shanghai and below Guangzhou's 5 percent. Developers pay 50 percent of the land premium up front, with the balance due within one year in principle and two years available for special projects only after a collective decision by the land transfer coordination body. Topping-out is defined rather than left to interpretation: roof concrete pouring complete, plus a main structure acceptance record signed and sealed by four parties. How projects already under construction will be handled has been left for further study.

Hangzhou went the other way on most of the same questions. Its deposit cap is 5 percent. Developers put down at least 50 percent of the land premium within 30 natural days of signing and can clear the balance interest-free over two years, with no additional approval step. They may choose between presale and completed sales unless the land notice specifies completed sales. Among the seven cities, Shenzhen and four others require a mortgage to be discharged before a sale, while Hangzhou and Wuhan permit a sale with the mortgage still in place provided it is cleared before contract registration.

The mechanism

Both cities are acting under the national Notice on Improving the Commodity Housing Sales System, issued on 28 August by the Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources and the National Financial Regulatory Administration. It sets topping-out as the presale threshold and directs local governments to prioritise completed-home sales on newly auctioned land.

Shenzhen's instrument is the Implementation Opinions on Implementing the Notice on Improving the Commodity Housing Sales System, a six-part document issued jointly by the Shenzhen Municipal Housing and Construction Bureau, the Shenzhen Municipal Planning and Natural Resources Bureau and the Shenzhen Regulatory Bureau of the National Administration of Financial Regulation. Presale funds run through a supervision account at a lead bank, with district housing departments holding territorial supervision and the Municipal Housing Provident Fund Management Center on daily oversight. Hangzhou's equivalent is a Trial Implementation Opinions, the only one of the seven city documents issued on a trial basis.

That matters for how much warning the next move carries. These are municipal implementation documents interpreting a central notice, not gazetted national law, and Hangzhou's is explicitly a trial. A city can retune a deposit cap, a land payment schedule or a transition window without a legislative process, so terms quoted at a sales gallery can be superseded between a reservation and a contract.

Context

Presale has supplied the bulk of China's new housing for decades, and the stalled and unfinished projects that followed the developer liquidity squeeze from 2021 are what this reform targets. Beijing, Shanghai, Guangzhou, Wuhan and Tianjin had already issued rules, all using 28 August as the cutoff for projects in progress, leaving Shenzhen last of the four first-tier cities to publish. Foreign nationals buying residential property in mainland China are generally limited to one home for their own use and must satisfy a city-level residence or employment requirement first, so presale terms are the main variable a foreign buyer can control. It lands alongside the one percentage point mortgage interest subsidy for first-home buyers that took effect on 1 October. Regionally, Hong Kong registrations rose 11.6 percent in September while staying below last year, and Taiwan moved the other way on credit by raising its second-home mortgage cap to 70 percent.