Researchers say big landlords are offering more bargains as the land and buildings tax approaches.
The new land and buildings tax that will become effective next year has prompted big landlords to offer vacant plots for sale with more relaxed conditions, according to property consultant Colliers International Thailand. The new tax is designed to expand the national taxpayer base, especially in asset-based taxation, with an aim to increase efficiency of tax collection among local organisations, narrow income disparity and improve land utilisation nationwide. Deputy managing director Sunchai Kooakachai said more landlords offered their vacant plots for sale in the first half of this year. “The top 50 wealthy families started looking for an opportunity to do something with their vacant plots after they learned the cost from the land and buildings tax. Some of them asked us to sell their pieces of land,” he said. Mr Sunchai said landlords were more prepared to compromise after previously asking buyers to pay 20-100% more than market prices with no sale time limit as they had no pressure to let go of land. Now, with the land and buildings tax about to become effective, they are more open to offers and set a time limit to sell of no longer than 6-9 months due to pressure to find a buyer.
The cabinet approved the long-awaited land and buildings tax in early June. It is designed to expand the national taxpayer base. The bill sets ceiling rates of 0.2% of appraised value for land used for agricultural purposes, 0.5% for residences, 2% for commercial use and 5% for vacant or undeveloped land. The tax will be levied on first homes and land used for agricultural purposes with appraisal value starting at 50 million THB. The rate will be applied to the amount exceeding 50 million THB. Owners of first homes and farms with an appraised value below 50 million THB will be free from tax liability. The tax will also apply to second homes on a progressive basis, with rates of 0.03% to 0.30% for homes with an appraised value of less than 5 million baht to more than 100 million THB. For vacant or undeveloped land, the tax rate will be imposed at 1% for land left vacant or unused for 1-3 years, 2% for 4-6 years and 3% for more than seven years. “These families hold 30-40% of total land plots nationwide,” said Mr Sunchai. “Before they were alerted by the new tax, they normally called bids when they wanted to sell their plots, which took at least six months. Now they won’t wait so long.”