Transfer fee set to rise from July 1

Owners who don’t transfer their land before the latest appraised value of land becomes effective on July 1 will face an increase in transfer cost of 5-20 per cent.

According to a survey by The Nation most landlords nationwide, who were negotiating sale of their land to property developers early this year, have decided to sell and transfer their land to the buyers before July 1, when the new appraised value becomes effective, the extent of increase depending on the location. 

This will lead to a hike of 5-20 per cent in transfer fee. 

Business Housing Association president Issara Boonyoung said the new appraised value did not impact directly the land price because market price is now higher than appraised value. However, owners transferring their land to buyers after July 1 will have to pay a higher transfer fee because the Land Department will use the appraised value as basis to calculate the transfer fee, which is two per cent. 

For example, when owners sell land worth Bt1 million, but the appraised value shows about Bt700,000, land owners will have to pay a transfer fee to the Land Department of Bt14,000. When the new appraised value becomes effective on July 1, if the appraised value increases from Bt700,000 to Bt800,000, land owners will have to pay a transfer fee to the Land Department of Bt16,000. Land-owners will have to speed up transfer, if they don’t want to pay the higher rate. 

However, the new appraised value will not affect residential price because land price accounts for only 30 per cent of total residential price, Pumipat Sinacharoen, Bangkok City Smart Co’s chief executive officer, said.

He added that home-buyers pay a transfer fee of only one per cent of the total two per cent. Property firms normally offer to pay one per cent, which means the rise in transfer fee is less when compared with residential price value.

For example, when home-buyers buy a single detached house priced at Bt3 million, land value would be only Bt900,000. This means home-buyers have to pay a transfer fee of only Bt9,000. Some property firms may offer to pay 2 per cent of transfer fee if they want to speed up sales of their project. 

Thai Real Estate Association president Kittipol Pramote na Ayudhaya said that although the Treasury Department had revised up the appraised value between five and 20 per cent nationwide, it will have less impact on the property market because the market price is already 20 to 100 per cent more than the appraised value, depending on the location. 

According to a report by the Treasury Department, the new appraised value will increase an average 21.34 per cent nationwide compared with the appraised value in 2008-2011. 

For example, in Bangkok the increase would be about 17.13 per cent, and in the provinces about 21.40 per cent. Southern Thailand shows a higher increase than other locations, with a record increase of 32.25 per cent, followed by the East 26.04 per cent, the Northeast 22.58 per cent, the North 14.84 per cent, the West 15.55 per cent, and Central 12.90 per cent. 

In Bangkok, Silom Road makes the biggest jump with land priced at Bt850,000 per square wah, higher than the appraised value of Bt650,000 per square wah in 2011. Ratchadamri Road and Rama 1 follow with an increase from Bt350,000 per square wah to Bt800,000 per square wah, and Phloenchit rises from Bt430,000 per square wah to Bt800,000 per square wah.