China’s central bank on Friday tightened rules around housing loans, including tackling couples in Beijing who get “fake divorces” in order to pay smaller down payments, in an effort to cool the city’s property market. According to China’s National Bureau of Statistics, new home prices rose 24 per cent in Beijing in February compared to the same month in 2016 adding that prices climbed in 67 out of 70 cities. The surge in prices has largely been driven by speculation, which authorities have been trying for months to rein in.

Last week, Beijing raised the down payment for second homes and suspended housing loans with a maturity of 25 years or more. In a new series of measures that was announced on Friday, the People’s Bank of China said mortgage seekers who had divorced less than a year before would be regarded as second-home buyers.

They will be required to pay higher down payments. “Limits on buying a second property had spurred a wave of “fake divorces” across the country. Couples used to divorce to dodge the rules, buy a second home and then remarry. Families who wanted to buy a second house could get a tax cut and pay a lower down payment through a fake divorce. So this new policy will strongly curb such behaviors,” Zhao Bo, an assistant professor of property economics at Beijing University said.

The central bank also called for stricter investigations into the source of the down payments and into the applicants’ housing loan records and ability to pay back the loans.

(dpa/NAN)