Transfer and mortgage fees for houses priced no more than 3 million baht would be cut to 0.01% of the appraisal value for six months as part of property stimulus measures going before the cabinet for approval today.
The incentives aim to alleviate the burden of low- and middle-income earners, who make up most of the country, in possessing their own homes, a Finance Ministry source said.
The Land Department now charges a housing transfer fee of 2% of the appraisal price and a mortgage fee of 1%.
The ministry has brushed aside property developers' request to include a reduction in specific business tax to 0.1% in the stimulus package.
Developers have not been in as much financial trouble as they were in the 1997 crisis and the ministry did not want homebuyers to use the stimulus measures for speculative purposes, the source said.
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% of appraisal price.
Finance Minister Apisak Tantivorawong has identified mortgage approvals as the main problem for the lacklustre sector, as rejection rates by financial institutions are high and low-income borrowers have been barred obtaining home loans.
Commercial banks' rejection rates for housing loans are as high as 60%, up from 20% in normal times.
An increase in the GH Bank's cap for mortgages to 50% from 30% of income to enable low-income earners better access to housing loans would also be included in the measures, the source said. However, the higher ratio will only be applied to the state-controlled bank's scheme to offer home loans totalling 10 billion baht. If demand is overwhelming, the GH Bank is ready to offer another 10 billion baht.
Prasert Taedullayasatit, president of the Thai Condominium Association, said tax incentives, if they were effective this month, would boost the overall housing market in the fourth quarter by 20-30%.
With the measures, housing market value this year would reach about 330 billion baht, up 13% from 293 billion in 2014. Without them, it would be 310 billion baht, rising only 7%.
"The government should make it clear whether there will be measures. Otherwise, the market will slow down as people wait for the measures to make a decision and those due to have units transferred will delay doing so," Mr Prasert said.
