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Published on March 28, 2008

Home-buyers have been delaying the transfer of properties in their name during the year's first quarter because they are waiting for the new government's tax package, which becomes effective in April.

According to industry experts, while this spells good news for consumers, it is having a negative impact on property companies' financials. Developers are now expecting first-quarter earnings to be below target.

Asian Property Development chief executive Anuphong Assavabhokhin said most home-buyers delayed the transfer of their residential properties, both condominiums and detached houses, after March 4 when the government announced a special tax package.

The package will reduce the special tax from 3.3 per cent to 0.01 per cent, transfer fee from 2 per cent to 0.01 per cent and mortgage registration fee from 1 per cent to 0.01 per cent. However, it will be effective from April 1 and could come into force as late as mid-April.

"Our customers who bought a property at the Address @ Siam project - which is ready for transfer - are delaying the transfer to avail of the tax incentive," Anuphong said.

He  said the company's first-quarter results may register slight growth compared to the same period last year, but could be lower than estimated. However, the company believes that sales will pick up and grow beyond the estimate due to the many residential projects which are ready to be transferred when the government package becomes effective next month.

NC Housing deputy managing director Somnuek Tanthathoedtham said the delay in transfer will spur a drop in sales of between 10 per cent and 20 per cent.

Property Perfect chief operating officer Dr Teerachon Manomai-phibul said his company will pay the transfer fee on behalf of customers who get the property transferred before April 1.

"We will absorb the higher cost. However, the transfers will help our cash flow and first-quarter sales will also go beyond our estimate," he said.

Teerachon said the company has recorded growth of 30 per cent in this quarter, subsequent to the return of customer confidence after the government announced its policies.

He said the property market is expected to grow between 10 per cent and 20 per cent this year.

Somluck Srimalee

The Nation

      At a glance

n The new tax package will reduce special tax, transfer fee and mortgage registration fee to 0.01 per cent.

n Some companies believe consumers will delay transfer of properties, spurring a sales drop of 10 per cent to 20 per cent.

n Some companies expect sales to pick up after April 1 when the tax package becomes effective.