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Building a healthy real estate market

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On December 3, 2020 the Executive Yuan approved the Healthy Real Estate Market Plan, a package of measures aimed at curbing speculation, amending sale-price registration legislation, combating real estate tax evasion, reducing excess market liquidity, and expanding social housing and rent subsidies. The goal of the plan is to build a healthy real estate market and bring about housing justice through better management of market behavior and increased access to quality residences.

Principal measures

■ Curb speculation: Local real estate markets have seen speculation in advance-purchase contracts—which specify agreed-upon (and sometimes premarket) sale prices—issued by builders or agents on receipt of speculator deposits. Should prices in the same development rise as sales continue, speculators profit by selling these contracts back to builders or agents when real buyers purchase the contracted units at higher prices.
To combat such practices, diagnostic indicators tracking both transaction behavior and prices relative to supply and demand are being compiled. A dedicated management team will also take charge of enhancing joint audits targeting this kind of speculation.

■ Amend laws to require prompt registration of true sale prices: Previous law required registration of sale prices not by property address but by district only. Amended legislation now mandates that actual sale prices for specific properties be filed before closing, then promptly registered and publicly posted when transactions go through. These changes will go into effect by July 1 and provide for more timely, transparent and accurate real estate transaction data.

■ Crack down on tax evasion: The tax code has been amended to require that income associated with equity transactions in unlisted corporations must now be reported together with personal income for tax purposes. Furthermore, the practices of establishing corporations to buy and sell property and thus take advantage of the lower corporate real estate transaction tax rate, as well as transferring shares in property-holding corporations tax-free to effect real estate transactions, will be eliminated. Rules will also be amended to prevent owners from subdividing single, high-value properties into many low-value units to evade property taxes.

■ Prevent excess liquidity flooding property markets: Banks will be supervised and encouraged to exercise caution when extending credit to finance new residential construction by developers and the purchase of residential real estate by investors for other than personal use, while selective credit control measures will also be adopted. To strengthen management of credit risk at financial institutions, special audits of real estate credit extension as well as standard operational auditing will continue, bolstered by already-announced risk management measures.

■ Boost market for social housing: The central government will build 66,000 social housing units and expand rent subsidies to cover 120,000 households per year, up from 60,000 currently. Incentives for landlords will also be improved to accelerate their participation in a managed subleasing program.

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