Property firms are planning to ask the incoming government after next month’s election to revise the taxation system related to buying and selling residences and to introduce fixed interest rates for first-home buyers as a long-term policy.
The move is prompted by election promises by the bigger parties of attractive periods free of mortgage-interest payments to woo voting support from new home-buyers.
Property firms say revision of taxes related to property resales and predictable low-interest mortgages for first-home buyers would make it easier for Thai people to own their own homes.
Business Housing Association president Issara Boonyong said that it was a promising time for the property business when political parties were announcing policies to help people to own their first residences.
However, the association believed that the incoming government should set a long-term policy related to the residential market, especially one that fixes mortgage-interest rates in the long term. This would help home-buyers to manage their financial costs and to more easily own their own home.
NC Housing’s managing director Somcho Tanthaterthum said that the government should revise the tax system related to the process of buying and selling residences to boost the residential resale market.
When buying a residence, home-buyers face transfer fees and mortgage fees amounting to about 3 per cent of the value of the residence. When they sell a residence, they have to pay personal income tax to the Revenue Department on the amount received from the sale, even though they might be selling at a loss. This system makes it difficult for people to sell an existing residence and buy a larger, more expensive one, he said.
If the government revised the tax system, this would boost both the residential resale market and the first-home market, Somcho said.
According to a survey by the National Housing Authority, demand for first residences averages about 300,000 units a year, and more than 60 per cent of this demand is for residences priced below Bt3 million, in what the property industry regards as the economy and middle markets.
When asked for his thoughts on election-campaign interest in the property market, Noble Development’s president Thongchai Busaraphan said the only support his company needed from the incoming government was political stability.
“If there is political stability and reconciliation, the country’s economy will grow strongly because it will be driven by the private sector,” he said.
Meanwhile, out on the hustings, politicians are appealing to home-buyers with enticing, populist offers.
In keeping with its existing programme, the Democrat Party is offering two years free of interest for home-buyers who buy a first residence costing less than Bt3 million. Pheu Thai Party is going further, and offering interest-free terms for the first five years for home-buyers who buy a first residence costing less than Bt4 million. Chart Thai Pattana Party is offering mortgages with an interest rate of 1 per cent for the first ten years for all home-buyers.
Pruksa Real Estate’s director and chief business officer Prasert Taedullayasatit said that all of these populist policies were a challenge for the property market. However, what was needed most was long-term policy to drive the market in the long term, and this should include measures like increasing tax refunds and otherwise revising the tax system related to buying and selling residences.
Source: The Nation