Developers urge the govt to double tax allowances for home-buyers

Bangkok Skyline

Bangkok Skyline

Property developers have called on the new government to increase the tax allowance for home-buyers from Bt100,000 to Bt200,000, as a means of directly increasing purchasing power next year at a time when consumers will be hit by the global economic downturn.

They also asked the government to extend long leases for foreign buyers from 30 years to 60 or even 90 years, as a way to boost purchasing power in that segment of the market.

At a round-table titled “How to survive the crisis in 2009″ - organised last week by Krungthep Thurakij - most property firms and other property experts called on the government to announce measures to drive the market over the next year, when they expect purchasing power to drop from the current quarter.

Nobel Development managing director Thongchai Busrapan said the most effective measure that would directly benefit home-buyers would be increasing the tax allowance for those buying into residential projects for their first home. They suggest the current allowance be doubled from Bt100,000 to Bt200,000, which would increase their purchasing power.

“The tax allowance worth Bt100,000 has focused on buyers of homes valued at about Bt1.5 million. If the allowance is increased to Bt200,000, that would expand the market for those buying more costly residences,” he said.

Prasert Taedullsatit, director and chief operating officer of Preuksa Real Estate, said that if the government increased the tax allowance for down payments in the first half of 2009, it would be a welcome boost for the market.

Demand for residential projects this quarter has shrunk by more than half from the same period last year. This trend is expected to continue until the first half of next year. As a result, Preuksa called on the government to launch temporary measures to boost the market over the next six months, he said.

extend long leases for foreign buyers from 30 years to 60 or even 90 years“The property market in Bangkok and its suburbs has recorded a value of Bt200 billion. When combined with related businesses such as furniture, home appliances and home decoration, it is worth Bt500 billion. That means that if the government launches measures to boost the property sector and related businesses to a value of Bt700 billion, it would in turn be a big boost for the economy,” Prasert said.

Thai Condominium Association president Atip Bhichanond, who is also deputy managing director of Supalai, said the association had tabled eight measures to the new government through the National Economic and Social Advisory Council last week.

They include: reducing corporate income tax; offering tax incentives for firms who hold on to their staff; a tax allowance of Bt20,000 per person for travel; tax refunds for foreign tourists when they use services such as hotels and transportation; a tax waiver for fixed-deposit accounts; a tax waiver on dividends from listed companies; and revision of the law concerning tax on the construction process, especially environmental impact assessments.

“If the government approves these proposals, it would directly increase purchasing power,” he said.

Colliers International Thailand managing director Patima Jeerapaet said the government should also target some help towards foreign buyers by extending long-lease contracts for low-rise projects from 30 years to 60 or 90 years, depending on the location.

Meanwhile, the government should increase the proportion of condos in a building that can be bought by foreigners from the current 49 per cent to 60 or 80 per cent, again depending on location.

According to the company’s research, although demand for residential projects from US or European investors has dropped, demand from Scandinavia has continued to grow. If the government extended visas from these countries the current three months to six months or a year, that would also increase this segment of the investment market, Patima said.

“If the property market can recover, it will also help related businesses to grow. That in turn would help the economy survive the global recession,” he added.

About the author

Somluck Srimalee Somluck Srimalee
Somluck Srimalee is a journalist with The Nation, Bangkok's independent English language newspaper and specialises in the property and real estate sectors.
Other posts by Somluck Srimalee ( 34 )
Website: http://www.nationmultimedia.com

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