Divorce Rate Surges in Shanghai as Couples Rush for Houses

There seems to be a new trend for Chinese couples: Get a divorce and buy a house.

At least this has been the case for the past few days in Shanghai. Couples have queued up in local divorce registration offices since Aug. 27, after a rumor suggested that the city will impose a new regulation on real estate.

The Jingan District Divorce Registration Office in downtown Shanghai observed a ten-fold increase in divorce applications, with 108 applications on Aug. 30 alone. In the past, the number of divorce applications averaged less than 10 per day, according to the English version of the Chinese online newspaper Caixin. Shanghai’s Pudong and Yangpu districts also saw nearly a hundred couples filing for divorce on Aug. 27.

Most couples filing for divorce were local residents who owned one house and sought to buy a second one to improve their living standard or as an investment, reported the state-run China Daily.  

The real estate market reached a climax during the same period. The number of houses sold stayed at over 1,000 over the three days since the rumor came out on Aug. 26, and surged to 2,100 on Aug. 30, according to the mainland financial news website cnstock.com.

The rumored rule change affects how those who are divorced are treated in purchasing a home.

According to the rumored new policy, buyers who divorced within a year would be treated according to their financial situation before the breakup, starting from early September. If they divorce before the regulation takes effect, then they will be treated as divorced. This status gives the divorced individuals important benefits.

Through divorce the couple could transfer the property to one partner, thereby allowing the other to qualify for a lower downpayment and favorable interest rates as a first time buyer, which, plus savings in income and property tax, could potentially save them 500,000 yuan (around $75,000) in 20 years.

According to the rumored new regulation, Shanghai house buyers purchasing a second property would have to pay for 70 percent down payment with a higher mortgage rate, as compared to 50 percent in the past. The first time home buyers would only need to pay 30 percent.

The Shanghai officials responded on Weibo on Aug. 29 to the rumors about a new regulation, saying that they “haven’t studied such policies.” Yet the denial did not stop the trend.

The demand for a divorce was so high that the offices simply couldn’t handle it. Xuhui district divorce processing offices issued a notice stating that the overwhelming number of divorce applications had exceeded their capacity, and asked divorcees to come back the next day. Some other district offices set a daily limit to the divorce applications they accept. Yangpu district, for instance, accepted 50 couples per day.        

“Real estate policy is said to be changing, it makes it easier to buy houses after a divorce,” said divorce applicant Mr. Chen, who just married half a year ago, according to Sina. “At most we would remarry when the time comes,” he added.

Divorce to buy properties is not unheard of in China. For the prosperous family divorce could mean a lower downpayment and mortgage, and the less well-off family could benefit by applying for affordable and low-cost housing in addition to the house they already have.

In 2009, 60 couples working at Shanxi Datong University filed for divorce in order to be allocated housing, according to Guangzhou Daily.

Xu Changhe, who did not have a Beijing residence, split up with his wife in 2013 and married Beijinger Pei Li through an agent, so that he could circumvent the city’s restrictions on non-residents and purchase a house in the capital. Xu reunited with his ex-wife a month after the deal was reached, according to Beijing News.     

Chuansongmen, a Chinese website, published an article humorously titled “The most romantic thing I can think of is to divorce and buy a house with you.” 

“When one person fakes a divorce to buy a house, you can accuse him of lacking ethics; when a group of people are doing it, shouldn’t we reflect on the ‘cruelty’ of the policy?” remarked a Weibo user. “It’s the kind of system that shaped the wonder.”