PURCHASES of house-and-lot units priced P2.5 million and above may slow down after the government imposed a 12 percent value-added tax (VAT) under the Tax Reform for Acceleration and Inclusion Law.
Instead of immediately buying, potential buyers would now consider more whether they’ll pursue the purchase or not or downgrade to a house and lot that is VAT-exempt, said Rio Teves, department manager III for Pag-ibig Fund Visayas- Business Development.
Teves noted that this impacts the high-end segment of the market only, although they received reports that there were some buyers who backed out.
“This is one of the substantial impacts of Train 1, as it jacked up prices of houses-and-lots and condominiums. Borrowers will shoulder the VAT if they will now buy at over P2.5 million,” said Teves.
Prior to the implementation of Train Law this year, house-and-lot units priced P3.199 million and below were VAT-free.
When the Train Law took effect at the start of the year, Teves said, developers had to consult their clients about the price adjustments.
But he said this is an initial reaction, particularly during the first quarter, and that strong buying will continue as the market adjusts to the changes.
“This time around, borrowers are now well aware of the VAT. Developers, on the other hand, screen the quality of borrowers, especially their capacity to pay and deliver to Pag-IBIG the folders of those who are qualified,” he said.
Meanwhile, the Organization of Socialized and Economic Housing Developers of the Philippines (OSHDP) cautioned the government that the private sector may stop developing socialized housing if incentives are removed under the Train 2 package.
OSHDP clarified that socialized housing, which is just a component of and is subsidized by its main housing project, cannot be viable on its own.
“Hence, the incentives currently enacted are mere ‘compensatory incentives for doing a ‘missionary’ activity, and should not be misconstrued as ‘investment incentives’ to be lumped under the proposed Strategic Investments Priorities Plan (SIPP) envisioned under the proposed Train 2 bill,” OSHDP pointed out, referring to section 20 of Republic Act 10884, which amended Republic Act 7279.
In place of socialized housing, economic and low-cost housing should be the types of housing to be placed under the purview of SIPP instead, which deserve “investment incentives” along with other sectors that may qualify under the proposed SIPP. (KOC)