The Thai government has approved a series of economic measures in the hope of lifting the sluggish property market. The cuts in fees and taxes is designed to help low-income citizens who have struggled to secure mortgages.
The incentives started yesterday, 14 October, and run until April 2016. These include reductions in the housing transfer fee to 0.01 percent from two percent, and bringing down mortgage fees to 0.01 percent from one percent. Meanwhile, another incentive will kick in at the start of 2016. Buyers of homes costing less than THB3 million (approx. S$117,091) will benefit from a tax deduction of 20 percent of the total price.
At the same time, soft loans amounting to THB10 billion will be offered by the Government Housing Bank (GHB) for home buyers who have been rejected by commercial banks. If insufficient, the government has the option of increasing the soft loan budget. The duration is one year starting from the middle of this month. Eligible borrowers must earn THB30,000 or less each month.
According to Deputy Prime Minister Somkid Jatusripitak and Finance Minister Apisak Tantivorawong, the measures were implemented in an attempt to help low-income earners purchase homes.
Apisak pointed out that mortgage approvals were the main reason why the market has slowed down. Rejection rates by financial institutions have reached critical levels and low-income borrowers have been unable to obtain home loans in recent times.
The rejection rates for home loans from commercial banks have jumped to 60 percent, a significant increase from the 20 percent usually recorded in Thailand. The ministry is targeting low-income buyers with these new measures as they do not want home buyers to use them for speculative purposes.
The specific business tax, a levy on developers when they sell a property and on owners who resell their property within five years of it being transferred, is now charged at 3.3 percent of the appraisal price, media reports said. This tax was put in place to curb speculation.
Despite the struggles of buyers, developers have actually seen demand in Bangkok remain strong, especially in prime CBD locations. Both high-income earners in Thailand and overseas buyers have been investing in property which has kept the market afloat.
This article was first published on DDproperty.com, Thailand’s leading property site.
