Already high, apartment rents and sales prices in six downtown Yangon townships will almost certainly head further north with the adoption of the 2016 Union Taxation Law, real estate agents told The Myanmar Times.
Workers are developing the Mahabandoola Housing project that will provide 1200 new apartments on Yangon’s outskirts. Aung Htay Hlaing/ The Myanmar Times
The new law, effective April 1, imposes a minimum 15 percent tax on property transactions, up from 3pc in last year’s law, which was adopted in a failed attempt to stimulate the flagging property market.
At the top of the range, sales of more than K100 million will be subject to a 30pc tax. Under the 2015 tax law, the 30pc tax did not kick in below sales of K1.5 billion.
“This fivefold increase in tax will turn everything upside down,” said U Than Oo, a real estate agent with Mandaing real estate.
“It’s bound to affect sales for inexpensive properties, which will lead to problems for the lower classes. For now, K30 to K40 million properties are not impacted by market cycles, but now people will have to pay more than 30pc tax on properties over K100 million. We will need to observe what happens next but there will surely be disorder.”
Sales between K30 million and K100 million will now be taxed at 20pc.
In an effort to crack down on money laundering, the 2016 law says immovable property sales will not be taxed if the source of the buyer’s income can be proved.
However, U Than Oo believes this policy will not have the desired effect.
“Real money launderers won’t be affected by the change in the law because their properties are already worth billions. This will only affect people who buy at the lower rates - not that anyone’s buying,” he said.
Apartment prices in the six downtown townships of Kyauktada, Pabedan, Lanmadaw, Latha, Pazundaung and Botahtaung are the highest in the city, said U Thitsar Lay of Golden Triangle real estate.
“That’s where the schools and offices are, so people who want to avoid traffic want to live there.
Most of the apartments are rentals, not sales. Ordinary people can’t afford to buy there,” he said.
Higher prices have already driven former downtowners out to Thaketa, Thuwunna, Thingangyun and other districts with high-rise apartments, said Ko Thitsar Lay, adding that there is no prospect of downtown rents falling. Indeed, rents in uptown townships are already rising to match or exceed downtown prices, he said.
Despite efforts by the Department of Urban and Rural Development under the Ministry of Construction to build low-cost housing, there are not enough such apartments, especially as the population of Yangon continues to increase, he added.
“Rents are not going to fall, so nor will prices. As long as demand exceeds supply, prices and rents will continue to rise.”
U Than Oo said the incoming government might set revised policies for the property market.
“On February 16, it was reported that the Yangon Region Hluttaw would inspect Yangon housing projects. We will have to see what conclusions they reach, and whether any new policy will affect downtown prices,” he said.
In Kyauktada township, one of the crowded six inner townships, a seventh- or eigth-floor apartment can sell for K37 million or rent at about K220,000 a month, say brokers. Rents have been increasing by 10pc a year.
The highest rents and prices can be found in Latha township, with a typical apartment selling at up to K40 million, with Lanmadaw in second place, they said.
But a well-appointed condo with parking space in Central Tower, Olympic Tower or Pansodan Business Tower between 39th and 40th streets costs more than K300 million.
From:Myanmar Times