New tax a worry for property developers

[rooster59]

New tax a worry for property developers

By THE NATION

 

 

Property companies are worried that the new land and building tax law will increase their costs amid the economic slowdown.

 

 

Under the new land and building tax act BE 2019, more taxes will be collected from property projects with unsold units, impacting businesses and the property market.

 

The act comes into effect from January 1, 2020, aiming to encourage the productive use of land and improve tax collection, as well as control the supply of condominiums and houses.

 

President of the Housing Business Association, Athip Pichanon, said that the property market slowdown will continue in 2020, worrying about remaining property stocks that must be sold as much as possible to avoid the effect of the new act.

 

“Presently, those property companies have suspended the launch of their new projects and were pressured by the act’s enforcement,” he added.

 

After receiving a licence to build houses or condos, if property companies cannot sell all units within three years, they must pay commercial tax at 0.3 per cent rate for commercial use. 

 

"If the number of unsold stocks is high, the companies will be damaged by the huge cost of their project,” the president concluded.

 

In fact, property entrepreneurs can push this cost damage by increasing the price of houses and condos. However, it was difficulty in the present situation when the economy was slowing down and the  purchasing power of people had decreased.

 

Athip advised that to solve the problem caused by the tax act, those property companies should sell their remaining stocks as much as possible before launching new projects. 

 

Also, in case property companies have to launch new projects due to being a company listed in the Stock Exchange of Thailand (SET), the new projects should be small, over only a few rai of land.

 

“The new condo and housing projects should contain at the  most 200 units, and should be inexpensive,” he said. “Those areas along the main line of electric railway were able to absorb new customers."

 

The president added that property entrepreneurs presently were careful, developing new projects according to the current economic situation and the  purchasing power of the people.

 

In the future when the land and building tax is enforced, he said that big projects with over 1,000 units like Muang Thong Thani were extremely unlikely. 

 

“Entrepreneurs are afraid to invest in a big project after condominiums with 1,000 to 2,000 units were unsold,” he added.

 

Source: https://www.nationthailand.com/news/30379704

 

-- © Copyright The Nation Thailand 2019-12-22

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[ukrules]

Once the panic sets in there should be a race to undercut each other to dispose of these now burdensome unsold and taxed units.

 

This won't please other owners in the same buildings who paid higher prices.

 

[URMySunshine]

My wife has three parcels of undeveloped land , one family house she inherited and two ocnos. She is looking to liquidate them all or give them to relatives except for our main condo as she doesn't want to pay tax on things she doesn't use. Many of her friends are thinking likewise -  a crash is definitely on the way fuelled ever more than rampant speculation in Bangkok / Pattaya /Jomtien where condo building is reaching ridiculous proportions. 

[Tounge Thaied]

Will 2021 be a good time to buy? Give this convergence of tax and oversupply time to settle in?

[URMySunshine]

2 minutes ago, Tounge Thaied said:

Will 2021 be a good time to buy? Give this convergence of tax and oversupply time to settle in?

That depends on so many things and for some no time is a good time to buy. Depends on how much money you have , what your long term goals are and what you want from a property. It's not always cheap to own a cheap condo as so many things can and do go wrong and do and are difficult to walk away from if you so desire. Asian investors and their continuing willingness to 'invest' in this market are key I would have thought and what is driving a lot of the (over) supply. 

[Tounge Thaied]

10 minutes ago, URMySunshine said:

That depends on so many things and for some no time is a good time to buy. Depends on how much money you have , what your long term goals are and what you want from a property. It's not always cheap to own a cheap condo as so many things can and do go wrong and do and are difficult to walk away from if you so desire. Asian investors and their continuing willingness to 'invest' in this market are key I would have thought and what is driving a lot of the (over) supply. 

I would not be "investing" with a purchase, as I am fully aware of the futility of that. But am interested in a long term purchase for pleasure at places like Jomtien, Chonburi etc. 2-3 million range.

[Maestro]

Removed a baiting post.

[ThomasThBKK]

1 hour ago, URMySunshine said:

My wife has three parcels of undeveloped land , one family house she inherited and two ocnos. She is looking to liquidate them all or give them to relatives except for our main condo as she doesn't want to pay tax on things she doesn't use. Many of her friends are thinking likewise -  a crash is definitely on the way fuelled ever more than rampant speculation in Bangkok / Pattaya /Jomtien where condo building is reaching ridiculous proportions. 

That's financial suicide. The taxes we are talking about here are on the residential side, as you aren't an SET listed property developer, they are NOTHING compared to normal appreciation of land and housing.

And quite sure u can write those taxes off from your income anyway.

 

The residential taxes are like 0.02%, that's 200 BAHT PER 1 MIO value - that's nothing. The normal appreciation rate is a few percent per year.

 

Do the math yourself, don't listen to populist bs from media and thai's who can't math.

 

 

[baansgr]

Riviera in Jomtien, units can be bought now at 30% less than the off plan price three years at..and still can get rid of them.

[URMySunshine]

35 minutes ago, ThomasThBKK said:

That's financial suicide. The taxes we are talking about here are on the residential side, as you aren't an SET listed property developer, they are NOTHING compared to normal appreciation of land and housing.

And quite sure u can write those taxes off from your income anyway.

 

The residential taxes are like 0.02%, that's 200 BAHT PER 1 MIO value - that's nothing. The normal appreciation rate is a few percent per year.

 

Do the math yourself, don't listen to populist bs from media and thai's who can't math.

 

 

A little more detail one parcel of land in Narithawat , an old family house in Yala that is pretty much unsaleable where her oldest sister and another sister and brother in law live that is mouldering away. Land in Nakhon Pathom that she took as security when another sister had large debts - her husband is retiring and has a lump sum coming to her so strike whilst the iron is hot and get her money back. And a new built condo in Hat Yai that she bought off plan 3 years ago and would be more than happy to get her million back or even 900 if necessary. We have a paid for house in the UK near London and considerable investment and savings and only spend 3 months a year here . So would like to tidy things up Thai side as less hassle and bother. 

[Redline]

5 hours ago, URMySunshine said:

My wife has three parcels of undeveloped land , one family house she inherited and two ocnos. She is looking to liquidate them all or give them to relatives except for our main condo as she doesn't want to pay tax on things she doesn't use. Many of her friends are thinking likewise -  a crash is definitely on the way fuelled ever more than rampant speculation in Bangkok / Pattaya /Jomtien where condo building is reaching ridiculous proportions. 

I’m selling a few as well

[alacrity]

13 hours ago, ukrules said:

Once the panic sets in there should be a race to undercut each other to dispose of these now burdensome unsold and taxed units.

 

This won't please other owners in the same buildings who paid higher prices.

 

If it's a knee jerk reaction to a finality, a terrible business plan is at fault. No matter the level of investment.

Nothing but empathy for those suckered. Could be a while for many of those buying for investment to break even. By which time it will be an old styled property needing further investment.

[ukrules]

16 hours ago, baansgr said:

Riviera in Jomtien, units can be bought now at 30% less than the off plan price three years at..and still can get rid of them.

It begins!

[jastheace]

12 hours ago, Redline said:

I’m selling a few as well

can never have too many ocnos, how much each ?

[ezzra]

On 12/22/2019 at 5:38 AM, rooster59 said:

President of the Housing Business Association, Athip Pichanon, said that the property market slowdown will continue in 2020, worrying about remaining property stocks that must be sold as much as possible to avoid the effect of the new act.

Meanwhile around Sukhumvit soi 59 and 63 there are over a dozen of huge projects hotels, condos and shops are being built like crazy at eye watering prices per sqm making you wonder who's going to buy all these units?...

[observer90210]

One could suspect in certain home developpments, the dishonest developpers, should they be farangs or Thais, will cheat the owners again and increase the community maintenance fees to cover their costs. As always, in Thailand, never buy purchase property, only rent.

 

Far to much cheating from the real estate developpers mainly in Bangkok and Hua Hin who do not respect their word and deliver unsatisfactory completition of houses.

 

Many acquaintances or friends who bought houses mainly in Hua Hin have reported issues with their developpers who did not respect the terms of what was agreed before the construction. And when the work is finally done, it's often after months and months of chasing the jackals to get them do the job.

[Srikcir]

On 12/22/2019 at 5:38 AM, rooster59 said:

Property companies are worried that the new land and building tax law will increase their costs amid the economic slowdown.

As I understand the history of this new tax, one of its goals was to end land speculation.

As such, land will be taxed according to its highest and best use regardless of its current use (ie., vacant, undeveloped, abandoned projects). In other words, actual revenue generation (if any at all) will not be a valuation consideration for property tax purposes. That might mean a developer's unsold condo units might be taxed at full market value (albeit after 3 years 'grace period').

Then pop goes the real estate bubble.

[Redline]

9 hours ago, jastheace said:

can never have too many ocnos, how much each ?

They are directly on the Pink line, so we have another year until the monorail is finished, then the price will be set.   Condos Sansari and Supalai.

[jastheace]

15 hours ago, Redline said:

They are directly on the Pink line, so we have another year until the monorail is finished, then the price will be set.   Condos Sansari and Supalai.

thanks, i will hold of for now, but again thanks for clarifying redline

[jackdd]

On 12/22/2019 at 1:09 PM, ThomasThBKK said:

That's financial suicide. The taxes we are talking about here are on the residential side, as you aren't an SET listed property developer, they are NOTHING compared to normal appreciation of land and housing.

And quite sure u can write those taxes off from your income anyway.

 

The residential taxes are like 0.02%, that's 200 BAHT PER 1 MIO value - that's nothing. The normal appreciation rate is a few percent per year.

 

Do the math yourself, don't listen to populist bs from media and thai's who can't math.

 

 

This is only the case in the center of some cities.

Look at the average moobaan somewhere slightly outside of a city:

The developer acquires land, builds some houses and sells them. Then over time they add more and more houses, depending on how much land they have left and how many buyers they can find. At least in the two moobans where i stayed in the recent years the prices of the houses always stayed the same for such newly completed houses.

If an owner wants to sell his house the only way to do this is by significantly reducing his price to be cheaper than the developer. Because who would buy a second hand house instead of a new house unless it's cheaper.

Once the developer runs out of land, after maybe 10 years or so, the houses which were sold at the beginning look quite shabby already, the moobaan isn't properly taken care of anymore and so on, which means nobody wants to buy them, at least not for a price higher than the inital buying price.