The government and the Democratic Progressive Party’s (DPP) recent efforts to establish a database to publicize and promote the registration of actual real-estate transaction prices are a move in the right direction of making the nation’s real-estate market fairer. However, these efforts are just a first step in fulfilling the many promises that politicians have made the public.
On Thursday, the Cabinet approved amendments to the Land Administration Agent Act (地政士法) and the Equalization of Land Rights Act (平均地權條例), saying it hoped lawmakers would review the revised laws as soon as possible to address public concern about real-estate speculation and surging housing prices.
Along with the Real Estate Broking Management Act (不動產經紀業管理條例), which is currently awaiting review in the legislature, the government said these laws would require that land administration agents, real-estate buyers and real-estate brokers register the actual value of property transactions within 30 days of deals being closed. If the parties involved fail to do so or register inaccurate prices, they would be subject to a fine of between NT$30,000 and NT$150,000, the government said.
As public discontent over high housing prices and widening income disparities has become a major issue ahead of the presidential and legislative elections, the legislature on Friday decided to skip a preliminary review of the DPP legislative caucus’ amendments to these laws, proceeding directly to the second reading.
It remains to be seen whether these amendments will be rushed through this legislative session as politicians have promised, so no one can be sure when real-estate transactions will become transparent. However, heightened competition between the DPP and the Chinese Nationalist Party (KMT) to devise better laws — and, of course, to win votes — will hopefully serve the best interest of the nation as a whole.
However, information disclosure about home and land transaction prices is only the very beginning of the process to establish fairness in the real-estate market. If buyers and sellers still view actual transaction prices as a secret and withhold that information from land administration agents or real-estate brokers, then public disclosure will end up doing nothing but disguising poorly devised legislation.
In this respect, there is still much work to be done by the government and politicians to devise a mechanism or invite an independent third party to help supervise public disclosure and verify information.
Another problem with Taiwan’s high real-estate prices, especially those in northern Taiwan, is that the nation has a relatively low real-estate transaction tax burden compared with other countries, which has encouraged speculation and further price rises. To contain speculation, the nation should stop using the much lower government-assessed value of real estate as the tax base for land and housing transactions; the actual market price should be used instead.
Moreover, the government needs to make a bold, determined move to help reform the current real-estate tax system, which allows it to collect various land and housing taxes based on assessed values. A better way to promote a more equitable society is to introduce a capital gains tax on the combined sale of land and houses based on actual market price.
While such reforms are likely to be opposed by some groups, the government could adjust tax rates based on the duration of possession and number of properties. It could also exclude the tax increase for people who own only their own home to make the system fairer and ease potential opposition.
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