Reduction of transfer & mortgage fees

In May 2019 cabinet approved “Government stimulus helping buyers!”.  The bill, designed to boost the ailing property industry, was implemented and came into effect on 2nd November 2019 and will run until 24th December 2020.

The Government stimulus package is expected to help 58,340 families own their own houses, helping 175,020 people.  Families that are low- and middle-income households who have yet to own their own home are the target.

What’s in the Government stimulus package?

So far the Government have announced:

• Reduced transfer fees from 2% down to 0.01% for properties with a registered value of 3 million baht or less.
• Mortgage registration fees to also be reduced from 1% to 0.01%.
• GHB Bank to offer a lower 3 year teaser rate at just 2.5% during the period.

There are further announcements expected from the Government initiative plan to help bolster the market which is integral to the economy.

Why are they introducing a Government stimulus bill

This isn’t the first time the government have implemented such actions, in 2009-2010 both the business tax was reduced from 3.3% to 0.1%, transfer fees from 2% to 0.01% and mortgage registration fees from 1% to 0.01%.  This was done to strengthen the market after the 2008 global financial collapse in which properties all over the world plummeted in value.

Towards the end of 2015 the Bank of Thailand announced warned high street banks to tighten their lending criteria as household debt to nominal GDP (see chart below) was showing signs of overheating with soaring levels of private debt.

source: tradingeconomics.com

We can see it hits its peak at the end of 2015 and the measures taken by the banks to tighten lending criteria causes a dip followed by a plateau effect.  This chart is a good indicator for the property market.  Bank lending determines property prices and buoyancy of the market.

The Government stimulus package has been introduced to boost property sales which helps both buyers and developers in a market which has become stagnated.