Property speculation costs to soar more than double

Wednesday, September 29, 2010
Issue 1127, Page 3
Word count: 796
Published in: Macau Daily Times

By Poyi (Natalie) Leung

The long-awaited property market regulations rolled out by the Government yesterday include the abolition of the intermediate transfer duty and tightening of the loan-to-value ratio for bank mortgages.

Secretary for Transport and Public Works Lau Si Io chaired a press conference to announce the specific measures formulated by the Working Group for the Promotion of Sustainable Development in the Real Estate Market over the past few months.

The six measures, which have been approved by the Chief Executive, are scheduled to be implemented as early as October, or by the end of this year, while the related draft laws are also expected to be submitted to the Executive Council for deliberation next month.

In order to suppress overspeculation in the local property market, the Government is going to increase the costs by cancelling the 0.5 percent intermediate transfer duty, and the property transfer tax will then be directly imposed on speculators.

The changes will double the cost of speculation for a property sold at MOP 1.5 million, or up to 380 percent for a property sold at MOP 10 million (see table).

The Financial Services Bureau will also reinforce inspections in order to make sure that the taxes will be paid on time.

The working group said if a person is found to have intentionally escaped the property transfer tax, he or she could be fined an amount equivalent to three times the tax.

Meanwhile, the Monetary Authority of Macau (AMCM) will issue mandatory guidelines to all the local banks concerning home mortgage loans in October.

People who want to buy real estate worth MOP 3.3 million or above will only be able to acquire a bank loan for a maximum of 70 percent of the property value.

As for real estate worth below MOP 3.3 million, the maximum loan-to-value ratio is 90 percent, but the maximum loan amount is no more than MOP 2.31 million.

The 90 percent loan-to-value ceiling is only applicable to Macau residents.

In addition, it is stipulated that the monthly repayment cannot account for more than half of the borrower’s income, and the loan period should not go beyond the borrower’s normal retirement age.

The working group explained that the MOP 3.3 million boundary is set based on the official statistics which showed that in the second quarter of this year, luxury apartments were sold at around MOP 32,000 per square metre, and also after consultation with the local banking industry.

A draft law will be prepared not only to give the Housing Bureau power to oversee the real estate intermediaries and their activities, but also stipulate the individual obligations and rights of real estate agencies and brokers.

As for the pre-construction sale, the working group said they will strive to announce the draft law for public construction this year.

The bill will consider regulating the period of pre-construction sale, the registration system and adding mandatory terms and conditions in transaction contracts.

More small flats on the way

Meanwhile, the secretary said in the fourth quarter of this year that a land parcel will be put up for public auction, but refused to disclose the location yesterday.

He said that the bidding rules will state a construction ratio of small units at around 700 to 800 square feet, as well as sale requirements and period.

He added that the Government will not control the selling prices of those small flats.

In addition, Lau Si Io said a number of property owners have applied to change the use of their industrial buildings to residential, adding that policies will be formulated to encourage developers to follow suit.

The working group has also disclosed that the Government may change some of the undeveloped industrial land sites to residential based on the new city planning.

Nevertheless, the officials reiterated that certain land parcels in the new reclaimed area must be reserved for the construction of apartments that “meet local residents’ purchasing power”.

In the fourth quarter of this year, the Financial Services Bureau will announce more property market information including the quantity of residential flats that have paid the property transfer tax in the previous month, and also the average per square metre price and the average usable area.

Moreover, in order to promote development in the rental market, the working group will revise the housing tax regulations and strive to hand in the draft law to the Executive Council next month.

It is proposed that the rental property tax should be lowered to the same rate of the residential property tax.

The secretary stressed that the working group will keep a close eye on the effectiveness of the measures and also maintain close communication with the public and the industries after the regulations are implemented, adding that further changes could be made if necessary.

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