Proposed housing rules limit foreign investment, but with potential consequences for U.S. investors

This move aims to make it more difficult for Chinese companies to build factories in the United States The Ministry of Finance proposes new regulations This would make it more difficult for foreign citizens to purchase land near military bases. The administration plans to add more than 50 military installations in 30 states to a list of locations deemed sensitive to national security. The new rules would strengthen a 2018 law that allows the Committee on Foreign Investment in the United States (CFIUS) to block foreign land purchases if they are within certain limits of the base.

All foreign real estate transactions in sensitive areas may be subject to scrutiny

While residential investors and commercial companies occupy different real estate sectors, the proposed rule does not differentiate between the two when reviewing real estate transactions by foreign investors near locations they consider sensitive.

Chinese citizens are by far the largest group non-North America U.S. real estate buyers (13% of all U.S. real estate sold to non-U.S. citizens in 2023 were Chinese citizens), worth $13.6 billion.

Democrats and Republicans in Congress share concerns about Chinese investments in the United States, arguing they pose a threat to national security. Trump made headlines during his administration’s imposition of tariffs on Chinese imports. The Biden administration also imposes tariffs on the following products: Chinese electric cars and solar panels.

“CFIUS plays an integral role in U.S. national security by thoroughly scrutinizing real estate transactions near sensitive military installations, and this proposed rule would significantly expand its jurisdiction and ability to accomplish this important mission.” Treasury Secretary Janet Yellen said in a statement.

Part of expansion of efforts to target Chinese companies in U.S. real estate investments

The rule could further complicate Chinese real estate investment in the U.S., which has been growing steadily since the outbreak. Problems currently faced by China’s domestic real estate market. While the Biden administration was quick to point out that the proposed new rules apply to all foreign countries, there is no doubt that Chinese companies have been thrust into the spotlight by the U.S. government, with President Biden recently issuing an order Forcing a China-backed cryptocurrency company to exit It owns a property near a nuclear missile site in Wyoming. Chinese electric vehicle battery maker Gotion is building a $2.4 billion manufacturing plant in Green Charter Township, Michigan. thought to be under scrutiny.

Before the proposal, states took matters into their own hands

New proposed rules appear behind Individual states have passed their own laws regarding foreign real estate investment, including Florida ban most chinese Buying residential property without a green card. Many states have expanded Prevent Chinese individuals and companies acquire and set up factories and businesses, remove them from the U.S. economy and purchase homes.

Montana Governor Greg Gianforte signed a bill By 2023, the sale or lease of homes near agricultural land, critical infrastructure and military assets in the state to entities in six countries the United States has designated as foreign adversaries, including China, is prohibited. Texas, Alabamaand Louisiana Already tried similar suggestions Not very successful.

Under new proposal, Biden administration would be able to review all real estate transactions within the country Joint Base Cape Cod 100 mileslocated in Sandwich, MAmeaning Discount nearby boston and Providence, Rhode Islandcan also be reviewed.

Likewise, real estate transactions within 100 miles of Wright-Patterson Air Force Base Dayton, Ohiowill cover emerging columbus Industrial and residential real estate markets.

“The governor and the state Legislature do have a responsibility to keep our citizens safe and protected,” said Virginia Gov. Glenn Youngkin, who has blocked Ford Motor Co. from competing with Chinese companies in the state. Establish battery joint venture. wall street journal.

Youngkin also signed bills restricting China’s land purchases and the use of TikTok on state equipment. “China has very clear regulations objective: That is World domination at the expense of the United States,” Youngkin said.

Foreign buyers are paying more for U.S. real estate

According to recent Nar dataU.S. real estate is a coveted commodity for foreign investors and buyers, who typically pay 20% more than the year before. The median purchase price for foreign buyers is $475,000, while the median price in the U.S. $442,525.

as a result of

Not surprisingly, America’s Chinese community is outraged by what they see as discriminatory behavior and violations of the Fair Housing Act. Chinese Citizens in Florida be accused In May 2023, the state debate New property law signed by Governor Ron DeSantis That is Effective July 1 is discriminatory.

“Florida’s laws have had a ‘chilling effect,'” Jason Pugh, managing attorney at Pew Law Firm in Orlando, told U.S. News Axios. “We need a nationwide effort [referring to a bill proposed by two Democrats] Combat the rising tide of anti-Asian legislation. I think other red states like to follow Florida and Texas in trying to do “innovative” things, so I suspect we’ll see more of this Move forward”.

final thoughts

At any time a nation singled out As “adversaries” of the U.S. government, law-abiding American citizens whose families are from the United States will inevitably be hit. After all, the United States is a country of immigrants. Amid rising geopolitical tensions, the U.S. government must protect its interests while protecting the rights of individuals who want to invest in its real estate Legally.

One might be inclined to believe that denying non-U.S. citizens the opportunity to purchase real estate somehow limits the purchasing power of U.S. citizens of the same ethnic background, thus making this a controversial issue for some. However, all U.S. citizens can purchase real estate in the United States. Opposing a country’s interests or preferring its citizens to own real estate is nothing new and has happened in many countries around the world.

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Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.