In Thailand, land transfer fees are 2% the price of the land – the appraised value of land as judged by the government, not the market’s. Characteristically, appraised values are lower than market values of land by 30% on average.
Unfortunately, the Treasury Department of the Ministry of Finance’s land appraisals are outdated and are being reappraised. As a result, new land appraisals are seeing an average increase of 25% in value, bringing up the cost of land transfer fees.
Already, land costs for developers are 25-30% of total development costs and as high as 40% in city areas. On top of this, land prices in Bangkok saw a 20% increase the first half of this year.
Starting this January 2016, factor in an average 25% increase on land transfer fees on account of the new land appraisals, to go with other carry over costs.
*Average reported increase in appraised land prices by area so far;
- Sathorn 25%
- Sukhumvit 25%
- Ploenchit 18%
- Silom 17%
- Thonburi 109%
*Land close to mass-transit lines and in special economic zones will see significant increases in appraised values.
On average, Thonburi’s average land appraisals near the BTS line went from 215,000 baht per square wah to 450,000 baht per square wah following its top performing trend in 2014. (1 square wah = 4 square meters)
The new land appraisals and subsequent transfer fees are expected to generate 200 billion baht in tax revenue per year for the Thai government until the next rounds December 31st, 2019.
*As of article date, promotions on free transfer fees are being offered at the Home Buyers and Home Builder Expo 2015. More details here.