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Cailianshe News, August 5 (Reporter Li Jie)In the sluggish real estate market, many real estate projects have launched "0 down payment" home purchase activities to attract buyers and encourage them to enter the market faster. However, behind the seemingly attractive "0 down payment", there are actually many risks that cannot be ignored.

In response to this, regulatory authorities in many places have issued warnings about the potential risks of buying a house with “0 down payment”.

On August 5, the Zhengzhou Housing Security and Real Estate Management Bureau issued a risk warning, stating that some real estate projects have recently launched "0 down payment" home purchase activities in violation of regulations. In order to prevent such behavior from causing economic losses and legal risks to home buyers, the Municipal Housing Security Bureau issued a warning about the related risks of "0 down payment" home purchases.

According to the Zhengzhou Housing Authority, "0 down payment" is usually obtained by real estate developers or real estate agencies through advance payment, or by virtually raising the price of the house and obtaining the down payment from the bank in the form of a mortgage loan.

On September 9, 2017, the Ministry of Housing and Urban-Rural Development, the People's Bank of China and the China Banking Regulatory Commission jointly issued the "Notice on Standardizing Housing Purchase Financing and Strengthening Anti-Money Laundering Efforts" (Jianfang [2017] No. 215), which clearly stated that real estate developers and real estate agencies are strictly prohibited from illegally providing housing purchase down payment financing, down payment installments and disguised down payment advances.

The Zhengzhou Housing Authority believes that "0 down payment" not only cannot fundamentally solve the problem of short-term capital shortage of home buyers, but also usually requires illegal behaviors such as signing shady contracts and overvaluing house prices to achieve it. This not only increases the loan interest and mortgage monthly repayment burden of home buyers, but also poses a greater legal risk of loan fraud. There are legal disputes in the purchase contracts signed by developers and home buyers, so both parties may be held criminally liable.

At the same time, some illegal operations involved in "0 down payment" cannot be clearly stipulated in the online contract, and will not be protected by law. Once the real estate developer fails to fulfill its promise and the bank cannot complete the loan approval procedures, it will cause economic losses to the homebuyer, and it will be difficult for the homebuyer to pursue legal responsibility and claim compensation.

Therefore, the Zhengzhou Housing Authority solemnly warns all real estate developers and real estate agencies to conduct business activities in accordance with laws and regulations. Real estate developers and real estate agencies that violate regulations and sell commercial housing with "0 down payment" will be severely punished in accordance with laws and regulations. In serious cases, they will be transferred to relevant departments for fines in accordance with the law. At the same time, their illegal and irregular behaviors will be recorded in the credit file and made public to the society.

In addition to Zhengzhou, Nanning also issued a risk warning on the "0 down payment" phenomenon.

On July 28, the Housing and Urban-Rural Development Bureau of Nanning City, Guangxi, responded to the "Suggestions on Stimulating Liquidity in the Real Estate Market in Nanning City" put forward by the city's people's congress representatives. When mentioning the issue of "0 down payment for the first home", the Nanning Housing and Urban-Rural Development Bureau clearly stated that the "0 down payment" home purchase method has risks and uncertainties and is not a sustainable way of buying a home.

Specific risks include: the repayment pressure on home buyers may increase; the existence of financial risks; and the legal risks that may be involved.

In fact, in order to increase buyers' enthusiasm for purchasing houses, various ways to lower the threshold for purchasing houses have emerged in recent years, and many developers have launched "0 down payment" housing purchase activities.

"'Zero down payment' properties often only appear when the market continues to decline, which reflects that the market in some places has not yet emerged from the trough and real estate developers lack confidence in the future." said Lu Qilin, research director of 58 Anjuke Research Institute.

CRIC analysts said that the "0 down payment" activity does not mean "you can buy a house without paying a penny down payment". Such activities can be divided into three operating methods: the developer pays the down payment, pays the down payment through consumer loans and other methods, and "high appraisal and high loan" (making the property appraisal price higher than the actual transaction price during the house purchase process). Since the compliance of these operations remains to be discussed, they are easily stopped.

Specifically, in the down payment phase, installment down payment is a marketing method commonly used by developers around down payment. In practice, it is often used in conjunction with low down payment ratios, which can increase the number of visits and improve transaction conversion to a certain extent. However, since low down payment ratios and installment down payment methods through third parties are not compliant, they are often stopped or even punished.

According to CRIC's research, such marketing activities often use "zero down payment" as a gimmick to attract buyers, but in terms of actual results, they are not very effective in facilitating transactions.

Industry insiders believe that there must be a lower limit for the down payment ratio for home purchases, and that under the banner of reviving the real estate market, we should not allow gray operations that are on the edge of compliance, such as zero down payment and down payment loans, to make a comeback. Instead, we should be wary of the potential risks involved.