China Relaxes Downpayment Requirements, Tax Rules For Home Buyers

(RTTNews) - China on Monday relaxed rules on downpayment requirements and housing tax for home buyers, as policymakers try to revive momentum in the slowing property market that poses risks to overall economic growth.

The People's Bank of China said on its website that the minimum downpayment requirement for buyers of second homes has been lowered to 40 percent from 60 percent.

Separately, the finance ministry announced that homeowners who have held a property for at least two years will be exempt from paying business taxes. Previously, only those who owned a property for at least five years were exempt from taxes.

Further, the central bank said first-time home buyers who borrow from the housing provident fund need to make a minimum downpayment of 20 percent. Second-home buyers using the same facility will have to pay a minimum downpayment of 30 percent. Both ratios were lowered from the previous levels.

The PBoC cut interest rates twice in last six months after recent economic indicators signaled moderation in activity.

This month, the government lowered its growth forecast to 7 percent this year from 7.5 percent set for last year. Full year growth in 2014 was 7.4 percent, which was the slowest in more than two decades.