Renters or home buyers will suffer

Second Property Tax: Renters and Homebuyers Will Suffer

From an insider's perspective, if the second property tax policy is applied, housing prices may continue to increase in the long term.

The Ministry of Construction recently proposed a second real estate tax to reduce housing prices. Photo: Thanh Vu

Rents and sales prices go up together

After many years of saving, Ms. Mai Huong bought another house on Bui Xuong Trach Street (Thanh Xuan District, Hanoi ). According to her intention, this real estate is "savings" for her children. However, to have more income to cover living expenses, she is renting the whole house to students for 2.9 million VND/month.

“Although my family has two houses, we are not considered wealthy. The ground-floor house in Bui Xuong Trach is the result of decades of savings by both my husband and I. Now hearing about the proposal to tax a second property, I am very worried,” Ms. Huong lamented.

Frankly, Ms. Huong said that if taxed, she would have to increase the price of her house to cover the cost. On average, after 2 years, she increased the rent by more than 400,000 VND/month. However, now the increase could be higher and the rental adjustment cycle will be shortened.

“When Hanoi tightened regulations on fire prevention and fighting, many landlords had to spend more money to install equipment. These costs are calculated directly into the monthly rent with an increase of 10 to 20%. Therefore, if there is any change that increases the capital cost, the landlord will always calculate it directly into the rent,” said Ms. Huong.

Speaking to Dau Tu Newspaper reporters, Mr. Hai Nam, a person with many years of experience investing in residential real estate in Hanoi, confidently affirmed that he is not worried about the second real estate tax. If this really happens, he just needs to increase the price of the house/land to compensate for the capital and the rest will be decided by the market.

“For properties in good locations, the demand for buying to live and invest is always very high. Look at the apartment market in the past 5-6 years, many apartments in the capital have doubled in price, but liquidity is still very good. Therefore, even when real estate prices are increased due to taxes, buyers continue to buy, sellers continue to sell,” said Mr. Nam.

In addition, this investor also predicted that if the tax is applied, the real estate industry will be shaken in the initial period. However, when the market gradually adapts to the policy, speculators can find ways to "evade" taxes, such as asking relatives to stand in their names, declaring transaction prices lower than actual...

Taxes will be incorporated into home prices

Speaking to reporters of Dau Tu Newspaper, Mr. Tran Vu, Sales Director of DHCONS Construction Joint Stock Company, said that if the second real estate tax policy is implemented, real home buyers or renters will be the ones who suffer the most, instead of individual investors or speculators.

“In Hoa Cuong Residential Area ( Da Nang ), the rental price of houses was only about 2 - 2.5 million VND/month 2 years ago, now it has increased to 3 - 3.5 million VND/month. However, the occupancy rate is always at 100% due to the huge demand for housing. That is only in Da Nang, not to mention Hanoi or Ho Chi Minh City,” Mr. Tran Vu cited.

The Ministry of Finance affirmed that the goal of limiting speculation and stabilizing the market will be difficult to achieve if only relying on taxation. Instead, the policy system needs to have synchronization between regulations on land, planning, etc.

From the above example, the Director of DHCONS argued that, in the case where real estate owners increase selling/rent prices to compensate for capital, workers still have to "bite the bullet" and accept the new price level, especially in central areas.

“Many families can move to the suburbs to save money. However, they cannot bear to see their children go to school far from home. That is why I say that the final home buyers/renters are the most vulnerable if a second property tax is imposed,” said Vu Tran.

Sharing more about the real estate tax story, Mr. Le Xuan Nga, General Director of BHS Property, commented that this regulation could make real estate prices less "hot" in the apartment segment in the short term. However, when the housing price problem has just begun to be solved, the market may have to face new difficulties.

“The market in general still has many segments that are quite quiet and are only gradually showing signs of recovering liquidity. If a second real estate tax is implemented, the market will immediately overreact and turn in a negative direction. This will make the already weak real estate industry even weaker,” Mr. Le Xuan Nga assessed the situation.

In the long run, Mr. Nga believes that the real estate segment will be even more sought after because this is a type that can create a steady cash flow for investors, thereby offsetting tax expenses. On the other hand, the land segment may lose its attractiveness due to not optimizing long-term profits.

Sharing about the issue of real estate prices after tax, the General Director of BHS Property said that this variable can only be solved by the law of supply and demand. This is a category that even tax policies find difficult to deeply impact.

Source: https://baodautu.vn/batdongsan/danh-thue-bat-dong-san-thu-hai-nguoi-di-thue-hoac-mua-nha-o-thuc-se-chiu-thiet-d226524.html