China steps up regulation of real estate agents as lived-in homes market shows signs of recovery

Chinese regulators have tightened their grip on real estate agents and their service fees.

To regulate pricing in the real estate services industry, China’s housing authorities and market regulators said in a notice on Monday that real estate agents should lower their commission fees “reasonably” based on the principle of “the higher the transaction amount, the lower the commission rate” and guide both sellers and buyers to share the fees. Agents will also need to make their fees transparent for each service item, and cannot offer a package or a bundle price.

Moreover, to maintain a fair market, real estate agencies with market dominance should not manipulate the market and charge a high fee, said the Ministry of Housing and Urban-Rural Development and the State Administration for Market Regulation. The operators of online real estate agency platforms also cannot force agencies to accept a unified rate for their services or intervene in how much agencies can charge.

“The biggest highlight of the regulations is the co-payment of agents’ commissions to protect homebuyers’ rights,” said Yan Yuejin, director of the Shanghai-based E-house China Research and Development Institute. “Some cities and companies are already charging both sellers and buyers.”

Home sellers and buyers will have to adjust their strategies to cope with the new co-payment requirement, he said.