China detains property agents over rumors fuelling sales and divorces

September 9, 2016 1:33 AM EDT

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BEIJING (Reuters) - Chinese police have detained seven property agents in Shanghai for spreading rumors of plans for a new government regulation that caused a rash of divorces and a rush to buy new homes, state news agency Xinhua reported on Friday.

The agents were alleged to have spread rumors online that a new regulation would require higher minimum down payments and mortgage interest rates for home buyers who have been divorced for less than a year, Xinhua said.

The rumors led to a surge in divorce rates and a buying frenzy in the financial hub, Xinhua quoted local police as saying.

The agents were accused of "affecting the stability of the local housing market" for better sales and commission fees, Xinhua said.

The city government has denied it was planning any changes to the city's home purchasing rules, according to the news agency.

Shanghai has widely been regarded as one of the most restrictive Chinese cities in terms for home buyers.

Migrants in Shanghai who don't hold the Shanghai household registration are required to be married in order to qualify for home purchases, and they are only allowed to buy one house per family.

It implemented further regulations earlier this year, including increasing the downpayment ratio for second-time home buyers.

(Reporting by Yawen Chen and Kevin Yao; Editing by Simon Cameron-Moore)

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