Chinese homeowner buys 34th-floor flat in 32-storey building, gets no compensation

A Chinese man bought a flat on the 34th floor of a newly developed building only to be told four years later that the building only had 32 floors.The man, surnamed Shen, from northwestern China’s Shaanxi province, bought a new-build flat in a village near the provincial capital city Xian in 2013.He bought a 90-square-metre unit on the 34th floor of a building which cost 2,646 yuan (US$400) per square metre.It was about one third of the average housing price, because the residential compound came with limited property rights.A woman rides a scooter past residential buildings at a housing complex in Beijing. Photo: ReutersA flat with limited property rights is an unofficial name for a kind of grey market housing developed illegally on the collectively owned rural land.Such residential housing is unapproved construction projects that occupy the idle rural land amid China’s urbanisation.Such flats cannot be resold, and are not protected by the law. But people still buy them because they are cheap.Shen paid for the initial 117,700 yuan (US$17,400) down payment to the developer in 2013.The developer reportedly told him that the certificates required to develop the property would be completed later.In fact, it is impossible for illegal properties to be granted the complete set of certificates.An agent attends to a customer near a scale model of residential buildings at a property fair in China. Photo: ReutersShen signed a contract with the developer which promised to deliver the property in 2015.Further ReadingShen returned to his workplace in Beijing and discovered that the building had not been completed by the agreed delivery date.In 2017, the developer told him the building was complete and asked him to pay the outstanding amount. Shen told them he would do so when they gave him the keys.Months later, they told him that the building where his flat was only has 32 floors.They initially offered a flat on the 32nd floor to Shen, but Shen did not have the rest of the payment at that time. Two months later, they told him the 32nd-floor flat was gone.Shen had to file a refund application, but the developer told him that they had no money and asked him to wait.In 2020, they refunded Shen 20,000 yuan (US$7,400), another 50,000 yuan in 2022, then stopped answering his calls since then.Shen requested an arbitration with the Xian authorities.The arbitration commission ordered the developer to pay back the 47,700 (US$7,000) down payment that they still owed him, plus 27,000-yuan interest.The agreement also required the developer to pay a compensation of 47,000 yuan if they fail to pay the owed money and interest to Shen.A happy Chinese family enjoy a meal together at home. Photo: ShutterstockHowever, as of May this year, Shen had still not received the further refund from the developer. He took it to the local court, which then issued a consumption restriction order on the debtor.However, the debtor did not have savings or properties registered under their name.On social media, many people commented on the risks of buying flats with limited property rights.“Flats with limited property rights are cheap, but have many problems. The man is unlucky but there is no way to help him,” one said.Another explained why she bought such a flat knowing its risks: “I would need to spend the same amount of money on renting a flat, and will still not own my flat in a decade.”