The Ministry of the Interior is “twisting” a new law by not retroactively enforcing a key component for curbing speculation in the real-estate market, legislators said yesterday.
New Power Party (NPP) lawmakers told a news conference at the legislature in Taipei that the ministry changed its position after it came under pressure from construction and development interests.
Amendments to the Equalization of Land Rights Act (平均地權條例), which the legislature passed last week, include a provision prohibiting people from reselling or transferring purchase agreements for presold or newly constructed homes unless done under special circumstances that have not yet been clearly defined.
Photo: Liao Chen-hui, Taipei Times
Under the new rule, speculators holding these purchase agreements would have to either pay a contract cancelation penalty to get out of the deal or wait until the home is built to sell the property.
On Sunday, the ministry said that the new regulations would not be applied to people who obtained purchase agreements before the new rule took effect, allowing speculators to sell them.
The regulations are to take effect after President Tsai Ing-wen (蔡英文) signs them, but it is not clear when that would happen as the Presidential Office has yet to receive the bills.
NPP caucus convener Chiu Hsien-chih (邱顯智) said that Acting Minister of the Interior Hua Ching-chun (花敬群) was “twisting” the law.
By Hua’s logic, a person who possessed a drug before it was declared illegal should be allowed to sell it even after the substance is banned, Chiu said.
He also said the ministry lied when it said it “revised its interpretation” of the rule after receiving complaints from young home buyers that the regulations would limit their ability to sell their property, placing them in greater financial jeopardy.
“The ministry clearly came under pressure from construction companies and speculators, hence the big U-turn,” he said. “Now, it is trying to shift the responsibility to young home buyers who filed complaints, which insults people’s basic common sense.”
The Taiwan People’s Party (TPP) also urged the ministry to reconsider its revision, which “opens a back door” for house flippers and speculators.
TPP caucus director-general Jang Chyi-lu (張其祿) said the ministry’s interpretation of the rule goes against Tsai’s promise to deliver housing justice, which has been one of her central policy promises over the past six years.
People have a reasonable expectation that they would be treated a certain way based on consistent practice or promises, and the government should not abuse that expectation to serve the interests of speculators, he said.
Hua said the ministry was not attempting to aid speculators.
Some home buyers could not foresee that the resale or transfer of purchase agreements would be banned when they signed their contracts, and some might have legitimate reasons to sell or transfer their agreements, he said.
Those individuals are being given a chance to do so, while those who obtain purchase agreements after the rule takes effect would be barred from reselling or transferring them, he added.
Regarding Chiu’s criticism that he had “brazenly twisted” the law, Hua said he “would not have had the audacity to do that.”
Whether the doctrine of legitimate expectation should be applied to this situation is open to interpretation, Hua said, adding that the ministry had discussed the issue.
Such considerations should not be equated with encouraging speculation, he added.
Purchase agreements are standard elements of presale housing transactions in Taiwan, but have been used as a lucrative tool for speculators in the past few years. Buyers obtain “purchase orders” by placing a deposit to reserve the right to purchase a presale unit when the project is first introduced on the market.
The agreements include an agreed-upon price for the property.
In the past few years, these purchase agreements have been “flipped” to other buyers when the price for the units go up as the presale process proceeds, providing speculators sizeable profits.
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