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Taipei, MOF work to curb real estate prices

TAIPEI, Taiwan -- Taipei City Deputy Mayor Chang Chin-oh (張金鶚) met with Finance Minister Chang Sheng-ford (張盛和) yesterday to discuss municipal and national plans to deal with high real estate prices observed in the market.

During the meeting, Chang Sheng-ford proposed the following four solutions: expanding the scope of luxury tax implementation, increasing the real estate holding tax, imposing heavier taxation on non-owner-occupied housing and accelerating the activation progress of public land.

In response, Chang Chin-oh provided his observation and analysis, stating that the current residential housing tax covers all housing, irrespective of its occupants, and adopts a rating system from 1.2 percent to 2 percent, which limits the margin of adjustment. Instead, said the deputy mayor, there should be a differentiation between owner-occupied and non-owner-occupied housing with a higher margin of taxation on the latter, reaching as high as high as 3.6 percent. The deputy mayor also stated that a system of progressive taxation will also aid in reducing market prices.

Following Chang Chin-oh's evaluation, both authorities went on to come to consensuses on additional topics: synchronization of the taxation of residential land and housing under one regulation, and encouragement of the leasing of unfurnished housing units and the previously proposed “good landlord tax reduction program.” Both authorities also stressed that should the consensuses be positively received by both parties, a “House Hoarding Policy” (囤屋條款) could be under way to raise taxes for people who purchase multiple properties for the purpose of real estate speculation.

The Legislative Yuan Finance Committee (立法院財政委員會) is also set to convene a review on the residential housing tax bill today, looking to decided on a rate of increase for both owner-occupied housing and non-owner-occupied housing.

Brokers Respond to Meeting

The Chinese Association of Real Estate Brokers (不動產仲介全聯會) responded to the meeting the deputy mayor and finance minister yesterday, stating that the consensuses proposed by the leaders will not solve the high prices of real estate, nor will they aid young people in purchasing their own housing.

The solutions to the problems, stated an association representative, is a complete reform of real estate holding and transaction taxation, as well as constructing government social housing projects.

Association Chairman Lee Tung-rong (李同榮) cited the recent Sunflower Movement as an incentive of the government to reduce real estate prices, saying that the reduction is a government tactic aiming to win back the support of younger demographics. Should the plan fail, said Lee, the government will have to face substantial consequences.

Lee did show his support for the proposal of tax differentiation between owner-occupied housing and non-owner-occupied housing, stating that the longer the ownership of a piece of land or housing unit, the more reason for tax reduction as it will be evident that real estate speculation is not in play. Conversely, non-owner-occupied housing and business properties should receive higher taxes as the holding period of the properties are relatively short.

April 23, 2014    edann77@
'... reaching as high as high as 3.6 percent. The deputy mayor also stated that a system of progressive taxation will also aid in reducing market prices.'

Another case where politicians hold a press conference to announce they will do nothing. This is equivalent to placing a fist-sized rock in the path of a river and then claim to have helped curb the pace of the water flow.
April 24, 2014    happy.chatting@
There are more and bigger elephants in Taiwan's room.

In contrast to other countries, Taiwan only has selling brokers and thus no brokers who work in the interest of buyers These sell and buy broker cannot be the same broker company. Why not have the brokers be only allowed to work in the interest of the buyers? The higher the prices the more commission for the broker, so this shows: when asking a broker, they have only good stories to tell about a house, they never tell the problems and the seller's price is always supposed to be reasonable.

Another problem is that new building construction design is crazy, with sometimes 50% of the pings sold is used as a common used public area. What a waste! Third, construction companies are corrupt, drive up process, because they can and can wait to sell, because they got the land for cheap. They also reserve the best apartments to sell at last. They tell these apartments are so called "sold" and once the other apartments have been sold, they start to sell these at last. All with the idea to drive up the prices even more. Brokers and construction companies are too greedy, full of tricks which of-course comes at a loss of the common person and future generations.

Fourth, any company can buy residential buildings for their families, employees or friends and pay much lower taxes than the common man. Why is this? Many of these companies reside in tax havens. These companies can then transfer theses assets to anyone, with thus lower taxes than you and me.

It will take unpopular measures to really make changes that will have true ripple effects in Taiwan's house market to result in fair trading mechanisms. It will depend on the strength of the government to do something in the interest of the people instead of the votes in the next election. So many young people live with their parents because of these ridiculous house prices.
April 24, 2014    edann77@
Measly measures are not going to curb speculative money into real estate when parking your money at the bank will only give a paltry 1% return. Taiwan's stock market has under-performed and is generally risky.

These measures may in essence exacerbate the divide between the rich and the rest by only discouraging the middle class from purchasing a secondary property for longer term investment. The cash rich will not be scared away by paltry taxations, and will take advantage of any exemptions being offered.

And they don't want to reduce property prices; they need to reign in absurd price increases in bubble markets. Make it more affordable. The environment is very favorable to real estate developers. Developers make really good money and they're even allowed to use foreign laborers to save construction costs.

Politicians should stop being a sock-puppet to big business.
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Taipei City Deputy Mayor Chang Chin-e (張金鶚), left, shakes hands with Finance Minister Chang Sheng-ford (張盛和) during a planned meeting at the Ministry of Finance, yesterday. Both authorities came to three consensuses during their one-hour meeting seeking to reduce high real estate prices. (CNA)

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