Asia Briefing: Measures to cool simmering housing market cause China’s divorce rate to heat up

Residential buildings under construction in Wuhu, Anhui province. New regulations allow married couples who jointly own two residences, but then divorce, to register each property under one person’s name. They can then sell those properties tax-free and remarry, causing the divorce rate to rocket. photograph: reuters

The property boom in China has forced countless changes in Chinese society, but one of the more remarkable side effects has been a massive rise in the number of divorces – in Beijing alone divorces were up 41 per cent in the first nine months of 2013.

The number of divorces reached 39,075 in the first three-quarters of 2013 in the capital, more than the 38,197 recorded in the whole of 2012, according to data from the Municipal Civil Affairs Bureau.

It is very easy to get divorced in China, and takes just a couple of days. People will often get married to get a Beijing or Shanghai residence permit, for example, then divorce soon afterwards.

While the divorce rate has been increasing in recent years, between 2008 and 2011 the rate never exceeded around 11 per cent. So 41 per cent is tantamount to a social revolution.

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While there may be a more startling reason for this, such as an unprecedented rise in general marital dissatisfaction, it is more likely that the rise in divorces is down to a pragmatic approach to dealing with property taxes.

In February China introduced a nationwide 20 per cent capital gains tax on the sale of homes owned for no less than five years, up from 1 per cent, as part of a raft of measures to cool the simmering housing market.

However, the new regulation allows married couples who jointly own two residences but then divorce to register each property under one person’s name.

They can then in many cases sell those properties tax-free. And, after that, they can remarry.

It’s happening in many Chinese cities, officials say. In the Civil Affairs Bureau in Shanghai’s Minxing district there are 30 divorce applications a day, up from 10 a day before the new rules, prompting officials to put up a poster warning that property speculation is a risky business.

“Please divorce with caution!” says the poster.

And there have been court cases of, predominantly, husbands refusing to remarry after a property tax-related divorce and opting to go for a new wife.