In Beijing real estate agent will be forbidden to withhold house rent, no commission will be charge for renewal.
It is definitely forbidden that real estates shall be entrusted, that is, agents shall withhold house rent and earn price difference, according to exposure draft of Regulations of Beijing Municipal Real Estate Brokerage.Some rules are formulated in view of some issues related interests of buyers and lessees. For example, it is going to be stipulated that commission shall be paid after real estate is transferred, and no commission shall be charged for renewal. The public may feedback their opinions and advice to Beijing Municipal Commission of Housing and Urban-Rural Development before the 24th day.
Owners “entrusts” their real estates to agents, and agents pay for house rent, and then rent the real estates to earn price difference, which is called “agent trusteeship” or “real estate bank”. Yesterday, Beijing Municipal Commission of Housing and Urban-Rural Development issued exposure draft of Regulations of Beijing Municipal Real Estate Brokerage to stop such service.
The regulation will be change to that house rent will be transferred directly between both owner and lessee
According to Regulations,the biggest change is to stop “real estate bank”, in this mode, agents usually sets up 1 or 2 -month vacancy during which no house rent is paid. After get the real estates, agents look for lessees by themselves and charge house rent.
According to Regulations issued yesterday, agents who accept trusteeship and withhold house rents shall stop accepting new trusteeship since the Regulations comes into force. As for business within contract period, agents shall sign supplementary agreement with owners and change house rent payment terms to be that house rent will be transferred directly between both owner and lessee.
As for the reason for stopping “real estate bank”, person responsible from Beijing Municipal Commission of Housing and Urban-Rural Development showed that this way was actually agent on both side, the purpose of agents was to “earn price differences”, not brokerage, and there was risk as well.
Agent shall not call or send message to interfere others
Meanwhile, According to Regulations, it is forbidden that the same real estate be sold and bought, rent out and in; it is forbidden to conceal real estate transaction information and to earn price differences by way of selling(selling) real estate received at low price at high price; setting vacancy etc.
This also means that not only “real estate bank” will be stopped, but also some agents “buy”real estate at lower prices and then “change hands”to sell them to others will be forbidden. In view of such violation, price administration department will, in accordance with rules, confiscate illegal gains and charge fines; in case of gross violation, administrative punishment such as suspension will be given.
Regulations to be implemented also include that agents are forbidden to interfere others by call, message, door-to-door negotiation, while agents publish real estate sources, they are forbidden to put billboards and distribute advertising bills outside their business sites.
In addition, According to Regulations,agents shall give tips on risk of transaction and fund to both parties actively. Agents are forbidden to fabricate, distribute price increase information to instigate owners to increase prices or collude with each other to keep property hoarding,speculate real estate numbers and manipulate market prices.
Agents withhold house rent, and owners will have big risks
Agents may invest with house rent withheld, once there is issue occurring, consequence will be very serious
It is known that many agents provide such service called as “real estate trusteeship”, and most of them are some small or black agents, some are even large agents. Some owners who are “afraid of troubles”also “entrust” their real estates to agents, and they charge house rent without worrying.
However, according to a senior staff of real estate, agents definitely don’t do thing without any profit. In normal situation, agents receive real estate at low prices from owners and then rent to lessees at high prices to earn price differences. Furthermore, they pay for owners by month while they charge lessees by quarter, semi-annual or annual, thus they have cash flows at hand, some agent will use these cashes to do some investment.
“If house rents keep increasing, there will no issue caused. If house rent decrease,problem will occur to agents’ cash flow ”, say this staff, “the biggest risk is that some agents use these cashes to do investment, once fails, huge issues will be caused”.
In recent years, disputes and events caused by “real estate bank” have appeared for many times. Beijing intensify supervision on such way, in case agents apply for such business, they are required to pay risk fund of RMB 600000 to Beijing Association of Real Estate Agents.
Focus of new regulations
Even if real estates are not transferred yet, commissions are already paid off, which is a difficult issue for many second hand real estate buyers.
According to regular way of agents, commissions must be paid when intention of buying is determined or deposits are paid and contact signed are issued on internet. Anyway, once there is accident occurring to the transaction, transaction fails, commissions paid are hard to be returned. Furthermore, many agents can’t provide corresponding service after charge commissions, which is accused very often.
According to Regulations ,it is definitely defined that agents can charge commissions only after they finish matters agreed in real estate service contract or their services meet standards agreed in the conracts. Simply speaking, it is expected that commissions will be charged after transaction.
About this, one GM of agent thinks that “charge after translation ” will cause risk to agents. “Now commissions are paid once contracts signed are issued on internet, if clients delay in paying for commission, such contracts can be removed to push them to pay.However, if commissions are paid after real estates are transferred, clients still refuse to pay, agents will have no choice but appeal lawsuits.”,says he.
He showed that if building market was hot, if buy is unwilling to pay for commissions ahead, then transaction will be canceled. Thus, in fact commissions will be paid by previous way, only clients don’t compliant, it is difficult for client to supervise. Anyway, in case there is dispute occurring between clients and agents, they can maintain their right by applying such regulation.
Agents assist to avoid taxes or suspend issuing contracts on internet
After “the five real estate market regulations” were issued, due to rapid increase in tax cost of send hand real estate, agent assist to avoid taxes, which has been exposed by media again and again.
For some tax avoidance tactics existing, one GM of agent says, frankly, that there are two ways to avoid taxes on the market, one way is to sign yin-yang contracts to avoid taxes though amount difference between lowest tax price and transaction price; the other way is to transact fake deed tax invoice through special agencies to change real estate resources with less than five years tax payment to be ones with 5 years, thus avoid taxes.
According to Regulations ,agents and their staffs are forbidden to provide any convenience for transaction parties to sign contracts with different prices on the same real estate in order to avoid taxes or ask for more loans.
How to penalize in case of violation of such regulation. Person concerned of Beijing Municipal Commission of Housing and Urban-Rural Development shows that Regulations belongs to local regulatory document without right of punishment, thus such violation will be handled according to lawful regulations and administrative rules of host laws.
In accordance with related rules of Beijing Municipal Commission of Housing and Urban-Rural Development, agent staff will be fined RMB10000 in case of tax avoidance, for agents, qualification for issuing contracts on internet will withdrawn, and they will be fined RMB30000.
No commission will be charged for renewal
Some lessees rent real estates through agents, although they pay for commission in the first year, they are required to pay for commissions again when renew in the next year.
It is known that now most agents not only charge commissions in the first year during their service, and they will charge again when lessees renew in the next year. Information is only provided once, so the commissions charged since the second year is to“reap without sowing”.
According to Regulations ,it is definitely defined that in case both parties of the same real estate brokerage business, agents shall not charge commissions again. That is to say, in case both parties of the same real estate renew the contract, agents can’t change commissions again. Li Wenjie, head of Beijing Association of Real Estate Industry, reminds both parties that in some contracts, lease period is 5 years, there is one article that commission will be charged every year based on one month house rent, such commission charged by agents is legal. Of course, in case the contract is renewed year by year, agents shall not charge commission again. By Ma Li, The Beijing News (The Beijing News)
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