Category Archives: International

What do community associations look like in China?

Shanghai urban skyline, China

Picture this: A place where community associations aren’t legally able to have their own bank accounts, property management companies can retain ownership of common areas and rent them out without homeowners’ consent, and developers interfere with board elections because they are opposed to the formation of community associations. While this might seem improbable, situations like these occur frequently in China.

In the U.S., the community association housing model has become commonplace. According to the latest figures from the Foundation for Community Association Research, there are roughly 344,500 common-interest communities across the country. CAI has chapters throughout the world, including Canada, the Middle East, and South Africa, and relationships with housing officials in Australia, Spain, Saudi Arabia, and the United Kingdom. But how prevalent are community associations elsewhere in the world?

They’re a recent development in China, emerging shortly after housing reforms in the 1990s. Previously, urban housing was mainly provided by danwei, or place of employment. Danwei were organized by occupation and were both a physical space where people lived and a system whereby the government could regulate residents’ decisions and actions. With economic and political reform, this system largely became obsolete, leading to significant housing changes.

In response to property rights violations by developers and property management companies, community associations began to emerge. Developers have been faulted for failing to give homeowners their deeds and using them as collateral for loans, understating the area of the home, or not providing promised amenities. Unlike in the U.S., where community associations are usually formed by developers and membership occurs upon purchase of a home, associations in China are a grassroots effort spearheaded by residents to preserve their rights.

From a cultural and political perspective, community associations are novel in the single-party authoritarian regime that is the People’s Republic of China. In a 2008 dissertation by Feng Wang, at the time a Doctorate of Philosophy candidate at the University of Southern California, local governments often looked down upon associations as “an unstable social force that interrupts the establishment of a harmonious society.”

In China, a community association needs to form a preparatory group before it can officially establish—a difficult process. Residents need a representative from their developer and management company. Without their participation, local governments easily strike down the burgeoning association. The group also must meet a voting threshold for approval, and appeal to the management company or developer for a list of residents’ names and contact information to generate participation. Causing further complications, the initial vote is determined by property percentage. This gives developers an opportunity to vote to block its formation if they still own unsold units.

Despite the difficulty in forming and managing community associations, some have achieved commendable success in the country. In 1998 (before some important reforms), residents in one housing complex in China staged a coup and successfully disbanded their HOA after discovering that their management company had falsified a neighborhood mandate giving them permission to form the group. New leadership was voted in, and an HOA with community approved leadership was formed. The group was even able to successfully negotiate lower fees with the management company.

The residential conflict commonly reported in the media in community associations across the U.S. seems trivial compared to the conflict between developers, property managers, and homeowners in China. One might even wonder at the seeming lack of internal disputes among Chinese residents. In fact, according to a survey conducted by Wang, 92 percent of homeowners rate conflict among themselves as a serious issue, but only 25 percent of community associations focus efforts on addressing these issues. It is precisely because of the focus on exterior challenges, rather than internal conflict, that many community associations in China have flourished despite an unfavorable environment.

Through transparency, inclusion, and mobilization of homeowners in China, associations have made huge gains for the rights of residents. Whether in China or the U.S., community associations cannot lose sight of their goals: to elevate residents’ standard of living and protect property values.

Read more about homeowners association in China in the following:

The post What do community associations look like in China? appeared first on Ungated: Community Associations Institute Blog.

Why are common-interest communities so uncommon in the U.K.?

Big Ben, London

Community association living is widely popular in many areas of the world. In the U.S., for example, there are 70 million people living in 344,500 common-interest communities, one in eight live in a condominium in Canada, and three million Australians live in strata communities. Condominiums have taken off in Europe too, especially in France and Germany. However, one country remains a laggard in this trend: The United Kingdom. Despite legislation introduced in 2004 to jump-start condominiums— or commonholds as they are referred in the U.K—less than 20 have been developed.

The commonhold system was introduced to phase out the most popular form of housing in the UK: leasehold. In a leasehold arrangement, the buyer rents a flat from the freeholder, or landlord, for a specified number of years. The freeholder is responsible for managing and maintaining the common areas of the building, such as hallways, roofs, and facades. The lease is typically long-term—often as many as 120 years—but begins to decrease in value as the lease nears its end. Many individuals have taken issue with the leasehold system. Complaints range from burdensome fees imposed by landlords to the costliness of extending a lease and the fundamental nature of a leasehold as a wasting asset.

With all the complaints surrounding leaseholds, one might wonder why there’s a lack of enthusiasm for commonholds? In theory, self-management of commonholds removes conflict with the landlord, and ownership alleviates the ticking time bomb worry of a lease. The Law Commission, an entity responsible for reforming laws in the U.K., has a few ideas as to why commonholds remain so sparse.

Some potential issues affect homeowners. When changing from a leasehold to a commonhold, the law requires unanimous consent from every inhabitant 21 years or older, the freeholder, and every lender with a mortgage. Naturally, getting this many people informed, let alone on board with such a big change, is difficult. In addition, the commonhold association, the U.K. equivalent of a community association board, is a company under the current law. As such, leaseholders could face criminal penalties for violating the law. This standard is much too risky for any homeowner. Regulations also might be too stringent in some areas and overly flexible in others. For example, maintenance obligations are unchangeable regardless of age and price of the building, but on the other hand, fire insurance is the only type of insurance buildings are required to have, whereas other types of buildings require flooding and theft insurance.

Overall, commonhold’s failure to launch might simply be due to lack of a financial incentive for developers and a gap in public awareness over this type of housing. These types of large-scale transitions can be difficult and require public backing. However, the U.K.’s housing reform endeavors are an admirable effort to jump-start conversation between potential homebuyers, legislators, commonhold owners, and developers.

The post Why are common-interest communities so uncommon in the U.K.? appeared first on Ungated: Community Associations Institute Blog.

Foreign Home Buyers: Where and Why?

The top five countries with international buyers purchasing in the United States are Canada, China, India, Mexico, and the United Kingdom. Where and why are they buying? Where Are Foreign Buyers Searching? Information from realtor.com (Omniture Discover) shows the U.S. cities for which potential foreign buyers have been most actively searching on-line:  New York, Los […]

U.S. and International Housing Prices: U.S. a Good Buy

Foreigners buy houses in the United States for a variety of reasons:  vacation, investment, rental, asset diversification, primary residence, and other purposes. With the dollar gaining strength against foreign currencies and inventories of available properties decreasing as prices increase, foreign buyers are finding U.S. properties becoming increasingly expensive. Are properties in the United States still […]

Rising Foreign Investment and Non-immigrant Admission Trends: An Opportunity for Engaging in Transactions with International Clients

The United States continues to be a prime destination for foreign direct investment[1]  (FDI) with its open investment regime and favorable economic and political environment. [2]  With its top-notch and many universities, the U.S. also has been attracting an increasing number of international students. Expanding trade and investment flows and increasing international student population present […]

Latest Data on International Trade and International Homebuyers

Both imports and exports are rising much faster than the broader economy. That means more companies are seeing faster sales growth to foreign buyers than to U.S. domestic buyers. A greater interaction with foreign economies, in turn, will mean increased demand for U.S. real estate by foreigners. Imports have been rising at 9 percent a […]

Key Facts: 2014 Profile of International Home Buying Activity

$92.2 Billion of purchases sold to foreign buyers, 12 months ending March 2014 Sales split approximately 50/50 between resident and non-resident foreigners. Foreign sales approximately 7 percent of $1.2 Trillion EHS market. 28 percent of REALTORS® reported having international clients. Market is a niche market—a relatively few REALTORS® handle many of transactions: e.g., 4% of […]

Investors and International Buyers More Likely to Pay Cash

Approximately 32 percent of respondents reported cash sales in May (same as in April), according to the May 2014 REALTORS® Confidence Index [1]. A substantial number of move-up buyers, investors, buyers of second homes, and foreign clients are likely to pay cash. REALTORS® reported that high income earners, especially those working in the technology sector, are […]

U.S. Cities Where Brazilians Looked for a Home in 2013

Which U.S. cities are of greatest interest to Brazilians searching for a house? NAR economists have created a City Search Index (CSI) ranking U.S. cities where Brazilians looked for a property in 2013. Topping the list for Brazilians seeking a home in the United States? Miami, Orlando, and Los Angeles. The index is based on […]

Which Foreigners Had the Greatest Interest In U.S. Homes in 2013?

Based on information from realtor.com, NAR economists have formulated a country search index delineating which countries had the most home search contact on realtor.com in 2013. The index is based on a count of actual house searches by potential buyers from specific countries (excluding Germany and Japan due to large numbers of U.S. citizens residing […]