Land speculators could get their fingers burnt if town planning rules prevent the construction of certain types of building on their property, a government minister has warned. U Soe Maung, Union Minister for the State President’s Office, says that city zoning could help stabilise land prices.
Yangon land prices have soared since the introduction of political and economic reforms, as developers have acquired plots they believe could rapidly increase in value. Rents for homes and offices have also shot up, and the number of squatters has risen. But the application of strict zoning rules could burst the bubble.
Speaking to the media last week following a parliamentary discussion about reining in land prices, U Soe Maung said, “A town plan would mean developers can’t build hotels wherever they like. Speculators can’t drive up prices any more for plots where building options are restricted. Land prices will drop automatically. And those who bought land could face losses.”
Myanmar Real Estate Service Association spokesperson U Khin Maung Aye said the introduction of a town plan would likely help stabilise a chaotic property market.
“But it’s going too far to say the prices would decrease, though they would be more stable,” he said.
Decreasing prices would require more low-cost housing for middle-class people, he said.
One approach is to promote development on vacant lands near downtown in an effort to build houses that are affordable on small budgets.
“It’s not easy for people to own an apartment, let alone land,” U Khin Maung Aye said. “If the government makes it easier, the market will be more controlled.”
The government has supported plans to target building 350,000 rooms in Yangon over five years, as well as develop town plans for Bago, Mandalay, Pathein, Mawlamyine and Taunggyi.
U Soe Maung said in the hluttaw there was no other plan to take action against price inflation caused by land speculation.
While there is no law restricting the rights of citizens to buy land or houses, investors already face taxes of up to 30 percent on appraised values plus a 7pc stamp tax levied at the time of each property transaction – though they are often avoided.
These values are determined by committees comprising the head of the administration department, the city development committee, police, community leaders and the head of the Internal Revenue Department.
The minister made his remarks after U Phyo Min Thein, who represents Yangon Region’s Hlegu constituency, asked in the Pyithu Hluttaw session on June 9 whether the Union government had a plan to use taxation to stabilise land prices.
“The collection of property tax could lead to scrutiny of local and foreign private organisations and companies and wealthy individuals who own more land than they need and fuel speculation in land prices, thus helping to control the rise in prices,” said U Phyo Min Thein.
Union Minister U Soe Maung said the government would consider adjusting the property tax system following a study of how other countries use tax to control land speculation.
“I will advise state and regional governments on a suitable property tax, and the Ministry of Finance will undertake to draw up the law if need be,” the minister said.
Source: Myanmar Times
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