The National Assembly recently put forward proposals for laws related to real estate affairs, such as imposing an annual tax on private housing plots owned by one person and plots owned by partners, a tax on owners of more than one property, lifting electricity and water subsidies for them and imposing fees on the purchase of (third and fourth private housing plot.
However, real estate developers see such proposals, as a step in the right direction to limit price hikes and speculation in the residential sector, but they are not sufficient on their own, and told Al-Rai daily in separate statements that such laws must be applied simultaneously with other measures; not the least of which is the provision of ready-to-use land in the sector for those eligible for housing care to reduce the number of housing applications that reached nearly 90,000 until last May, as citizens tend to rent in this sector until their turn comes since the waiting period stretches to between 15 and 20 years, reports Al-Rai daily.
A number of real estate agents expressed their fear that the citizen would be the only one affected by what is proposed in parliament in terms of imposing taxes and fees and raising subsidies, indicating that real estate owners and investors in the residential sector will work to pass these increases to tenants (the vast majority of them are citizens), because they are in control of leasing process that defines and regulates the process.
They pointed out that the solutions also lie in reducing the number of housing applications as quickly as possible, and establishing an authority concerned with real estate and land in all aspects, with the development of regulating laws and those related to real estate evaluation, conducting statistics, and collecting fees and taxes for buying and selling in a fair and transparent manner, to control market prices and eliminate speculation and consequently, it will lead to a fall in prices.
MPs Abdulaziz Al-Saqabi, Abdul Karim Al-Kandari, Muhannad Al-Sayer, Abdullah Al-Mudhaf and Badr Nashmi have submitted a proposal for a law to impose an annual tax on private housing plots owned by one person, and plots owned by partners if the total property owned by one of them is 2000 square meters or more, whether in one location or multiple locations, and in one project or multiple projects, explaining that the proposal comes in an effort to reduce the high prices of private housing.
The proposal provides for exempting the first and second property owned by one person from the tax, provided that it is imposed at a rate of 2.5 percent of the market value of the third property, 5 percent for the fourth property, 7.5 percent for the fifth, and 10 percent for the sixth or more.
The five deputies themselves also presented another proposal to raise the electricity tariff for the second and third housing, so that “the third or more private housing for any owner is treated as a commercial housing, just as the second housing that most consumes water and electricity is treated as a commercial housing, if the total area of the first and second housing combined exceeds 2000 square meters.
MPs Al-Saqabi, Al-Kandari, Al-Sayer, Al-Mudhaf, and Hamad Al-Matar proposed adding a new article, No. 58 bis A, to Amiri Decree 5/1959 of the Real Estate Registration Law, which stipulates imposing fees on the purchase of private housing plots for the third and fourth real estate.
Ibrahim Al-Awadi, Chairman of the Real Estate Association and CEO of Aayan Real Estate Company, said that the proposals submitted by some deputies are a secondary solution to the high prices in the residential sector and limit speculation in it, while the main problem lies in the large demand against the limited supply.
Real estate expert Suleiman Al-Dulaijan said that imposing fees and taxes on the private housing sector will be reflected on the final consumer, whether the tenant or the buyer.
He stated that the impact of taxes – if applied – will be on the consumer because offers are few and demand is high, and that raising electricity and water fees will be passed on to tenants and will be borne by the Kuwaiti citizen who usually rents in this sector.
Real estate management and development expert Muhammad Al-Nouri, supported the imposition of taxes on the sale and purchase of real estate in the private housing sector, stressing that the imposition of the tax must be preceded by several things to prevent speculation and price manipulation and to avoid the use of private housing for other than its purpose, as is prevailing now.
With regard to water and electricity tariffs, Al-Nouri stated that many investors take advantage of the state’s support for the private housing sector for all services, as they have worked during the last period to convert many properties into investment apartments to maximize the rental value and benefit from it at the highest level, which has brought prices to insane levels.
The CEO of Aqar Investment Company, Khaled Mirza, said that the solution to reducing private housing prices and limiting speculation in it lies in serious steps to increase the supply of land, launch projects for the private sector, and provide the largest possible amount of real estate products for those eligible for housing care, stressing that the solution to imposing taxes and fees and raising subsidy on electricity and water is good, but it must be accompanied by other steps that address the root cause of the problem, which is the large demand from Kuwaitis for housing in this sector who are waiting for housing welfare.
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