Stamp tax, drop in funding seen hindering socialized housing

Font Size

Informal settlers fetch water from a busted pipe as they continue to occupy a mass housing project for police for almost a month now in Pandi township, Bulacan province, about 50 kilometers (31 miles) north of Manila, Philippines Wednesday, April 5, 2017. -- AP/BULLIT MARQUEZ

THE HEAD of a socialized housing developers’ group said the increase in documentary stamp tax called for by the Senate’s tax reform bill, and the decrease in the housing budget, will set back efforts to clear the housing backlog in Metro Manila.

“We are very much concerned… the documentary stamp tax was just doubled,” Marcelino C. Mendoza, president of the Organization of Socialized Housing Developers of the Philippines, Inc. (OSHDP) told reporters on Wednesday on the sidelines of the Outlook, an event hosted by online real estate platform Lamudi.

The Senate’s tax reform package, approved on Nov. 28, includes among others the doubling of prevailing documentary stamp tax rates on bank checks, to P3 from P1.50.

Mr. Mendoza said that the increase in tax can be a setback for the real estate industry. “Real estate is about transactions… The stamp tax is (typically) used to cool off demand in housing bubbles; now it is going to be used to raise revenue. It will have quite a big impact.”

“The industry is producing only about 230,000 units at most in a year, but projected demand is about 800,000, so there goes your housing backlog. So it means that we can’t even catch up on a yearly basis and add to that, the 5.7 million, or some statistics say 6.1, 6.5, it is big.”

Mr. Mendoza said that the government is addressing the problem, particularly for minimum wage earners. “That segment of the market is well taken care of.”

However, the bigger problem is giving housing to informal settlers.

Mr. Mendoza said the industry can offer shift profits from mid-market operations to serve the low end, but added that in places like Singapore, it is the government that builds housing for the poorest.

“The government is really trying to address this big concern, but the budget (for housing) was reduced.

The private sector can help in addressing this problem, but land use remains a setback, said Mr. Mendoza.

“The capability of the private sector is there, you just need the papers. The problem is land. If the government can really access public land, then there would be a way in which the private sector and the government can develop this land.”

Socialized-housing companies can then offer housing at monthly amortizations of around P500-P800 for those who can least afford housing.

OSHDP welcomes the proposed creation of a single government body to address human settlements, saying it is a vital step in solving the housing problem.

The Senate is expected to approve the bill proposing the creation of a Department of Human Settlements and Urban Development, to harmonize all eight government agencies related to housing and urban development.

“That is most welcome, we have been fighting for that for about 20 years. It is just the start of the solution… Under the housing agencies are the shelter agencies which have their separate charters, NHA (National Housing Authority) has its own charter, Pag-IBIG is a GOCC, they all have their own mandates,” Mr. Mendoza said.

He added: “It gives our sector equal bargaining position with respect to in terms of the Department of Agriculture, Department of Agrarian Reform, even with the DoF.” — Patrizia Paola C. Marcelo