After a real estate contractor in Jingde city, Jiangxi Province, issued a “Notice to suspend construction” on June 30, the property owners jointly declared the suspension of installment payments, followed by a movement to announce the cessation of installment payments in many Chinese cities. So far, many real estate owners in more than ten major cities and provinces have issued notices of “suspension of home payments,” sparking social concern.
According to a report from NetEase, on July 10, the owner of the Greenland Optics Valley Galaxy, dubbed the “highest residential property” real estate in Wuhan, also issued a “payment suspension notice,” “announcing the suspension of monthly personal loan payments to the home loan bank from the contract handover date of December 31, 2022, until the contractors complete the acceptance and handover of the real estate projects.
Greenland Optics Valley Galaxy is located in the Wuhan Optical Valley, where high-tech businesses are concentrated. According to yahoo, out of more than 2,400 property owners, 1,414 people have university degrees or higher, accounting for nearly 60%, including 341 masters and 41 doctorates.
Why put 30 years of income into unfinished buildings
According to Sohu, Ye Qing, one of the homeowners who announced the suspension of rent payments, said that at that time, the property was very popular because the unit price of $2,800 for each m2 was lower than the nearby real estate. More than 3,000 people entered the draw in the first round, but only two or three hundred houses existed. After that, there were nine sales in 6 months. At that time, Ye Qing felt very lucky; she said: “I still remember the night when we got the number, we stayed at a hotel nearby, and I was so happy that I was jumping in bed all the time, now I don’t even want to remember this scene again.”.
In December 2020, she bought a 123m2 3-bedroom house with an upfront payment of $103 thousand and a monthly payment of more than $1200.
Both she and her husband come from ordinary rural families in Hubei province. After buying a house, her husband quit his job in Guangzhou to go to Wuhan to work; she has been pregnant since the beginning of this year. But their apartment on the 20th floor is still unfinished.
Due to the epidemic’s impact, Ye Qing’s husband has not been paid for four consecutive months, and due to pregnancy, she can only do some office work, causing her income to decrease by more than $600.
Ye Qing said: “Now my baby is about to be born, and it is unknown when the house will be completed. Ye Qing doesn’t know what life will be like in the future. She said, “I don’t know what will happen next, and I don’t know how long the house I’m renting will be available. We have borrowed money to buy a home for 30 years. Maybe in the future, we will have to put all the income of 30 years into this unfinished house?
“We have no choice. We don’t want this unfinished project to follow us for the rest of our lives. We still have to worry about the rest of our lives. Whether this house can be built or not, we can’t help it. We have to plan for our baby.” Ye Qing said it’s too late to consider whether she’s exposed to some risk.” I may be affected by the bad credit report for the next 30 years (because of the suspension of monthly mortgage payments to buy a house.” She continued: “But I have no other choice. I can’t think too much. I can only deal with it. I have only the immediate problem; my house is still unfinished. Do I still have to consider the impact of a bad credit report?”
Ye Qing even imagined the worst-case scenario, and she said: “I’ve thought about it carefully; after giving birth, I will divorce my husband, hand over the children to him, and the house will be handed over to me. Credit investigation affects only me, not other people.”
Thus, after many requests to complete the house without results, Ye said she “only has divorce as a way to save the child.”
According to Sohu, another home buyer, Wu Tian, who works in the Information Technology field in Shanghai, also said that after the building where he bought the house was suspended from construction, he had to take a leave many times to go to Wuhan, Hubei Province to make a complaint, and the process was harrowing.
Wu is from Ezhou Town, Hubei Province. Because he wants to return to Wuhan to work and live, plus his child will go to elementary school next year, in May four years ago, he paid $104,000 to buy a house from the real estate company Greenland Optics Valley Galaxy, using the money he earned from 10 years of work and also the money to buy the first house.
But he didn’t expect that when he started contributing $935 per month, the Greenland Optics Valley Galaxy Project would suddenly stop. Wu Tian said: “My child will enter primary school next September; now I am very worried because he cannot go to school here if we do not have a house to live in.”
Wu Tian said that he had repeatedly applied for leave to go to Wuhan to protect his rights, but the matter remains unresolved. He was also laid off and unemployed during this time, having to stay home for 3 or 4 months. He shared: “This whole process is very difficult. I must pay for living expenses, buy a house, and consider my children’s education. Now the house has been suspended from construction.”
He reluctantly said that, although announcing through the “suspension of mortgage payments,” he could face the possibility of a bad credit rating and consumption restrictions, not being able to travel by plane, or high-speed train, even affecting their children’s schooling, etc. Still, there is no other way, and he can’t keep paying for a house for over 30 years when it is never completed. “I could just divorce my wife, give her the kids in my name, then start trying to get the loan terminated,” he said.
According to Oriental Daily, the owner and developer of the Greenland Optics Valley Galaxy had previously been embroiled in a protracted “controversy.” They had entered into no less than ten negotiations. Through debates and negotiations, the homebuyers of the projects gradually exposed the problems of the Greenland Optics Valley Galaxy. They announced that: this project has moved money out of the presale account against the plan, appropriating the capital of home buyers.
The mortgage suspension notice issued by all Greenland Optics homeowners indicates that, since the property opened in December 2020, the prepayment sales amounted to over $700 million within half a year. However, construction was suspended from August 2021 until July 2022, and the real estate developers embezzled $108 billion of the key custodian fund. The new real estate project is less than 35% complete, and the current real estate construction cost difference is nearly $120 million.
According to Newtalk, as of July 16, a collective of home buyers from 284 real estate projects in China issued a “Notice about the suspension of installment payments,” involving more than 25 provinces.
The report points out that this wave of installment suspension notices issued directly by the owners indicated that the bank had illegally issued residential loans to the builders, failed to submit loans, and failed to fulfill the obligation to supervise the fund.