The government last week announced a broad menu of stimulus measures to combat slowing growth, including financial stimuli to help the residential sector. These include:
- The ownership transfer fee of freehold real estate of 2.00% of a property’s assessed value and the mortgage registration fee of 1.00% of the value of the loan will be reduced to 0.01% from 19 October to the end of April 2016.
- First-time buyers who purchase a residential unit worth not more than THB 3 million by the end of 2016 can deduct 20% of the value of the unit from their annual taxable personal income, with the deduction being divided in equal amounts over a period of five years.
Though these measures are for a short term, it is hoped that they will help stimulate Thailand’s housing sector, particularly Bangkok’s softening condominium market along the extended mass transit system where the number of new condos priced at less than THB 3 million has mushroomed, according to real estate specialists JLL.
Suphin Mechuchep, Managing Director of JLL Thailand.
Suphin Mechuchep, Managing Director of JLL, commented: “Though the proposed short-term measures are unlikely to help boost new demand in the residential market, it should give an incentive to home buyers to make a purchase decision faster and accelerate the ownership transfer process.”
While the tax incentive for first-time home buyers is likely to create a stronger impact as it helps increase affordability for buyers, JLL says the reduction in the two transaction fees will encourage serious, prospective buyers to purchase backlogged units in completed housing estates and condominium developments and residential projects whose construction will complete before the stimulus measures expire.
JLL does not however expect the reduction of these fees to have a big impact on less serious prospective buyers. “Though the ownership transfer and mortgage registration fees collectively account for about 40% of the typical transaction costs for residential real estate in Thailand, they do not represent a significant proportion of the total transaction value,” said Mrs. Suphin.
(Source: JLL Thailand)