A series of solutions to stabilize the real estate market has been recently released by the Ministry of Construction (MoC) for public comment before they are proposed to the Government.
Specifically, the MoC would require owners of commercial housing projects occupying 10 hectares or more to reserve at least 20% of their land areas to build houses for lease and houses for social policy beneficiaries. At the same time, while elaborating urban development plannings, localities must set aside 10% of the total urban development land areas for the construction of these houses.
In order to support the development of the real estate market, the MoC proposed that the provision of credit for investment in essential real estate such as dwelling houses, workshops, office buildings and trade centers should be encouraged. It also suggested the reduction of the real estate transfer tax rate to 1% from the current 4%, the non-collection of personal income tax on income earned from the sale of houses or the incorporation of real estate transfer tax in personal income tax or corporate income tax.
However, the MoC emphasized the need to restrict loan provision to land speculators and proposed the imposition of progressive tax on households and individuals that possess houses or land in excess of the prescribed limits. In addition, households and individuals that sell their houses or land within two years after purchase would face a tax rate of 25-28% on the disparity between the buying price and the selling price.
The MoC is also expected to shortly submit to the Government a draft circular requiring all transactions related to houses and land under real estate projects to be carried out through real estate trading floors. Although the Law on Real Estate Business does not require individuals to conduct transactions with one another on real estate trading floors, the draft paper stipulates that for real estate without land use right certificates, house ownership certificates or construction work ownership certificates, involved parties must register transactions through a real estate trading floor or center.-