The Executive Yuan on Thursday approved a proposal to mandate the disclosure of the actual-price registration system for all property transactions nationwide, including addresses, and several related measures, as the government last week took several steps aimed at the real-estate sector.
It also approved stricter reporting requirements for pre-sale housing project transactions, giving regulators the power to increase the number of audits, raising the fines for providing false information or failing to report transactions, and cracking down on tax evasion in transactions under a company name.
All these measures still require the Legislative Yuan’s approval
The Executive Yuan’s decision came after the central bank on Monday announced new selective credit controls to cap the loan-to-value ratio at 60 percent for housing loans granted to corporate buyers on their first property and 50 percent for their second, while setting the limit on the ratio for individual buyers’ third property at 60 percent.
The bank also announced a cap on land financing for developers at 65 percent of a plot’s value, with 10 percent of that to be set aside until construction begins, a requirement for concrete development plans and a limit on loans to developers that use unsold houses as collateral at 50 percent of their value.
Also on Monday, the Financial Supervisory Commission said it would later this month begin a special examination of the nation’s top 10 mortgage lenders, looking at their real-estate loan risk assessment.
The Ministry of Finance on Thursday said it would work to close a legal loophole that allows companies to avoid taxes by dividing units into separate properties and might raise the so-called “property hoarding tax” for unsold houses, while the Ministry of the Interior said it might tighten regulations on pre-sale housing projects if the situation does not improve.
The announcements show that the government is redoubling its efforts to rein in real-estate speculation and achieve housing justice.
The property market has boomed over the past year as many Taiwanese businesses with overseas operations have begun returning home to invest, more electronics producers are seeking to expand domestic production and loose monetary policies around the world are boosting the flow of capital, all of which have led to rising real-estate demand.
The signs of property speculation linked to capital inflow and loose lending have in the past few months made headlines and put pressure on the government.
The implementation in 2016 of the so-called “integrated house and land sales tax” left sellers facing income taxes of 45 percent on property transaction gains on houses sold within one year of purchase — and led to some investors shifting their focus away from the domestic market.
However, Taiwan’s housing market has been unusually hot this year — despite slower GDP growth. It shows that the phenomenon is not normal, prompting the government to move to curb speculation.
The latest actions by the central bank and government agencies are largely targeted at house and land hoarding, as the authorities hope to reduce anticipation of price increases and curb efforts by developers to artificially ramp up prices.
Yet these measures are not enough. To discourage speculation and irrational price hikes, the government must expand the availability of social housing and rent subsidies, and increase inspections to determine how housing is being used.
It must also steer funds into other sectors to keep surplus capital from flowing into real estate and overhaul property tax rates to increase holding costs.
A healthy real-estate market is crucial to the economy, and maintaining the long-term stability of property prices should be one of the important policy goals for the government.
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