Shanghai targets illegal home presale activities

The Shanghai government will launch citywide inspections to crack down on illegal home presale activities by real estate developers and brokerages, state media reported. The inspections will focus on residential projects currently in the presale phase and developments that have qualified for presale but have yet to apply for certain government certificates. Common illegal activities in the presale process include taking deposits from buyers, deliberately postponing launch dates, holding back sales to boost profits as prices rise, and signing fake home purchase deals. Developers will also face punishment for failing to disclose all apartments available and their prices, setting “abnormally high” prices, or faking sale contracts to create artificial supply shortages. Developers and brokerages are already banned from selling two or more homes to a single family as part of efforts to restrain speculation and price growth.