Home buyers in Tianjin, China, have been waiting for their house for eight years

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People wait at Wu Qing Railway Station, Tianjin, on January 8, 2016.

Fred Dufour | Episode | Getty Images

BEIJING – A group of about 1,500 homebuyers in the Chinese city of Tianjin, near Beijing, have yet to see – let alone live in – the apartments they say they paid for about eight years ago.

As is common in China, the Tianjin apartment complex sold the units before they were completed. They were promised to be finished in 2019, but the majority are still unfinished, according to five homebuyers, who spoke to CNBC by phone but requested anonymity for fear of reprisals. The buyers are a mix of people who have paid in full upfront, but also in smaller installments. Their concerns are just one example of the broader challenges facing China’s real estate sector.

After previous attempts to get their money back or gather information about their real estate purchases, some buyers said police visited their homes, sometimes in the middle of the night.

“I feel like I’ve been fooled this whole time,” one buyer said in Mandarin, as translated by CNBC.

“My only request is that I can return the house and get my money back,” the buyer said. “Even if I can get the house, I will feel bad.”

Some buyers said they bought the apartments as a place where their parents could retire, or where their children could attend school nearby. In the eight years we had to wait to move, one buyer said one of their parents had died while waiting for the new house, and another said their child had grown up and found another school instead.

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Asking buyers for more money

The developer in the case, Zhuoda Yidu, asked home buyers late last month to approve a dispute settlement, a copy of which was seen by CNBC.

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The document stated that the apartments could be completed in 2025 or 2026 if the buyers agreed in the coming weeks to pay any outstanding balances for the purchase of their property, along with other costs as determined by the developer.

The proposal offered no alternative and said the properties should be valued at pre-market prices – or about double or more than current levels, according to comparisons with listed real estate agent prices. Not to mention eight years of wear and tear and the potential disruption to the families’ life plans.

“The money for the down payment was my dad’s,” said one buyer of a home purchased in 2016. ‘I can’t tell him it’s not finished yet. During Covid I told him there were delays. Now Covid is gone and there are no excuses.”

In addition to paying for that apartment in full, this one buyer pays a monthly mortgage of about 2,800 yuan for a second apartment in the same complex, which was intended for a family member.

The situation has fueled a feeling that no matter how much money is spent, buyers will never get their homes, one of the sources said. The individual noted that in a group chat of about 500 fellow buyers on social media, about 90% rejected the developer’s proposal.

Zhuoda Yidu was unavailable for comment, despite multiple attempts by CNBC to call and email the company and its representatives. A lawyer handling Zhuoda Yidu’s bankruptcy and liquidation case referred CNBC to the Tianjin Wuqing District People’s Court for comment. The court did not respond to CNBC.

Wang said this was the first time she heard of homebuyers having to pay more to get their completed apartments.

She said that prior to the Covid-19 pandemic, there were sporadic cases of delayed deliveries, especially in cities such as Tianjin, where real estate development boomed in 2014 and 2015. She said local authorities and developers at the time would typically find a solution quickly. because it involved a lot of money for an average family.

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Interest in Tianjin and other areas around Beijing soared ahead of the pandemic, as people working in the Chinese capital looked for more affordable housing options at a time when prices were nearing a peak.

In addition to China’s recent real estate problems, the homebuyer’s dilemma has its roots in a household registration system – called hukou – that, among other things, determines where your children can go to public school. Cities like Tianjin have also used hukou policies to attract new residents.

But Wang noted an increase in delivery delays post-Covid as developers struggled to keep going, resulting in a “systemic problem.”

China’s top leaders said at a meeting in late April that they would continue working on it ensure the delivery of homes and protect the interests of home buyers.

China’s Ministry of Housing and Urban Rural Development and its local unit in Tianjin’s Wuqing District did not comment when contacted by CNBC for this story.

The developer Zhuoda is far from one of the largest in China. Some homebuyers who spoke to CNBC said that after making the first payments, they discovered that the property in question was not necessarily a certified project.

In a sign of problems with the project in the beginning, the official newspaper “Tianjin Daily” reported in March 2017 that the same Xiyu Garden project built by Zhuoda Yidu Investment in Wuqing District of Tianjin violated the city’s real estate transaction rules by collecting money from buyers without obtaining a permit to sell commercial properties. According to the report, local authorities have imposed sanctions and ordered rectification. Data accessed through company database Qichacha shows that Zhuoda Yidu only received permits for commercial residential sales in August 2018, although it had already received construction permits for part of the project in 2016.

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One home buyer confirmed to CNBC that the buyers were able to obtain purchase certification after the incident described in the Tianjin Daily report.

The buyers of the Tianjin apartments interviewed for this story said they were aware of a failed attempt to get the project on the central government’s list of unfinished housing (which would typically provide financing until completion). guarantee), although it was unclear whether this was due to the poor results of the project. certified status. Some saw the latest proposed dispute resolution as a response to central policy changes, as it was a way to complete construction rather than leave the project hanging.

The problems in the real estate sector have also weighed on local government finances, which once generated significant revenue from land sales to developers.

Among Chinese high-income cities, Tianjin also has that one of the highest levels of debt to GDPThis is evident from figures from S&P Global Ratings.

For many households, real estate represents the majority of their wealth, often the result of grandparents and relatives pooling their savings.

One home buyer invested 190,000 yuan to purchase 700,000 yuan for a two-bedroom apartment, 90 square meters in size, in the unfinished Tianjin apartment complex.

That’s a savings of several years. The average disposable income per capita in 2023 for Beijing city residents was 88,650 yuanAnd 51,271 yuan in Tianjin, reflecting the much lower cost of living.

“We don’t have that much money,” the buyer told CNBC. “If we had enough money, we would buy in Beijing.”

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