NEW GOVERNMENT POLICIES

NEW GOVERNMENT POLICIES

HBA: Fine-tune proposal for low-income buyers
The government's home-finance policy should accommodate low-income earners by laying out clear guidelines for first-time purchasers in order to ensure full coverage for potential beneficiaries, says the Housing Business Association (HBA).

Interest-free home loans for five years for first-time buyers of units priced up to 4 million baht are in the works, but the final shape of the policy has yet to be decided.

HBA president Issara Boonyoung said qualifications for first-time home purchasers should be clarified, as a similar campaign implemented by the previous government limited eligibility too narrowly.

An important condition of that programme was that homebuyers had to be first-time buyers, ruling out those already registered as homeowners.

"But many residents who are not the owner of the house they live in are technically registered as such, barring them from the programme and the opportunity to own a home," said Mr Issara.

He suggested adjusting this qualification for the new campaign in order to ensure all real first-time homebuyers are given a chance to participate.

Mr Issara said the proposed maximum unit price of 4 million baht under the new scheme is too high, as anyone who could afford such a price tag could not be considered a low-income earner.

Buyers of a 4-million-baht unit will have monthly income of 100,000 baht and be eligible for special tax deductions of up to 500,000 baht for interest payments.

However, those struggling to pay one million baht for a house are not eligible for such incentives due to their low income. The new government may adopt the Baan Yim programme that the Bangkok Metropolitan Administration (BMA) offers to its civil servants.

The BMA provides interest-free loans up to a maximum amount, levying the normal rate of interest on any excess.

"This would cover a larger number of homebuyers and reduce the amount that the government would need to spend on the programme," said Mr Issara.

The previous scheme of two-year, interest-free home loans carried a credit line of 25 billion baht but had to compensate the Government Housing Bank (GH Bank) another 450 million baht in interest.

The new campaign should be implemented as soon as possible to avoid a hiccup in demand due to buyers delaying purchases while waiting for it to begin, said Mr Issara.

Otherwise, developers will have to come up with their own solutions to accelerate their housing transfers and sales.

He said commercial banks will not be able to match the GH Bank's rates, as two years is the maximum they can offer interest-free.