(Yicai) Sept. 26 -- Lianjia, China’s leading real estate brokerage, has cut its fee on property sales in Beijing by a quarter after regulators urged brokers earlier this year to charge more reasonably to help boost the market, Beijing Daily reported.

Lianjia has cut its commission to 2 percent from 2.7 percent and is splitting it equally between buyers and sellers, whereas only buyers paid previously, the report said today. The 2.7 percent was made up of 2.2 percent in brokerage charges and a 0.5 percent service fee to guarantee the transaction.

China’s property market has slumped over the past two years after developers got into financial difficulties and consumer confidence faltered. Pre-owned home sales in Beijing halved in June from March to 11,607, according to figures from the city’s housing commission, and almost half, around 5,000, were sold by Beijing-based Lianjia.

Lianjia, which translates as Home Link in English, was founded in 2001. Its parent company, KE Holdings, went public in New York in August 2020. Its shares [NYSE: BEKE] have gained 11 percent since the end of last year.

Real estate brokers need to lower their fees on the sale and leasing of residential properties and both parties should share the expense, the Ministry of Housing and Urban-Rural Development and the State Administration for Market Regulation said in a document published in May. Fees should be determined according to the principle of “higher selling prices, lower service charges,” it said.

Some of Lianjia’s outlets in Beijing had already started to split the commission between buyers and sellers in May, China Business Journal reported today.

Beijing’s pre-owned housing market used to be a sellers' market and commissions were solely borne by the buyer. But slow sales and a glut of properties coming onto the market this year have made owners more willing to lower their asking prices or bear part of the commission.

Back in 1997, Beijing’s local government said that the fees charged by real estate agents should not be higher than 2.5 percent, and should vary according to the housing price bracket. In 2011, the city’s development and reform commission reduced this to 2 percent, but the fee for certain standard charges was increased to 10 percent, bringing the fee up to 2.2 percent.

Editor: Kim Taylor