There’s a potential for Hong Kong to have Vacancy Tax for developers because the government does not want the developers to hoard unsold units. They prefer for all the units to be sold instead. “Under the bill, first-hand units that remain unsold and have not been rented out for more than six months during the past 12 months will be subject to special rates. Special rates will be collected annually at two times the rateable value of the units concerned, which roughly equals to 5 per cent of the property value.” Please read the full article in South China Morning Post here.
In Vancouver, Canada the city collected CA$39.4 million (RM124 million) just for year 2018 alone. This is part of the empty homes tax and this number is already lower because of the shrinking number of vacant homes in the city. This tax revenue was collected from owners of 1,989 properties and in 2017, a total of CA$38 million (RM119 million) was collected from 2,538 homes. 2018 has thus shown a 28% drop when compared to the year before. Mayor Kennedy Stewart said, “The main objective of Vancouver’s Empty Homes Tax is to influence property owners to put their empty properties on the rental market and the data shows that is happening.” The full article on it here: globalnews.ca
Meanwhile as an article from contributor in nst.com.my A writer has put forth his argument that developers who built too many and thus have unsold units currently should be penalised with a vacancy tax. This is where any property left vacant and unsold for a certain amount of time should be charged with a penalty based on a percentage of the gross price. The higher the selling price, the higher the tax quantum.
He said that such a measure will force developers with high-priced properties to lower their prices in order to sell them easily. It will be a win-win situation where property prices are lower and developers’ cash flow improves though the developer may incur a loss if the cost was actually higher than the selling price. He also gave an example of properties on auction where if there were no bids, then the next auction will see the price being lowered by 10 percent. This is continued until the property is sold. He has also put forth many other points. Do read it here. An article from contributor in nst.com.my
Actually, there are already countries implementing the vacancy tax. Plus the tax is used for affordable housing for the poor which is a noble goal indeed. However, it may be better if the vacancy tax is announced and a future date is determined. In other words, any new developments beginning from that date onwards would all be subjected to vacancy tax if it remains unsold for a period of time. To suddenly announced it now and subject all the developers who did not know many years before that they will be imposed such a tax will definitely be unfair.
As for pushing prices down, let’s understand that developers are profit-oriented entities. If they did not get enough margin from earlier projects, they will get back the margin from later projects. I am just not sure who will be the ones suffering from higher prices. Perhaps those who bought properties later? Let’s see if the Minister of Housing and Local Government will respond to this letter contributed to The Star. Happy following.
Next suggested article: If we overbuild.Disaster awaits. Property will surely affect the economy.