RANGOON — Rangoon Division’s Internal Revenue Department has completed its annual evaluation of real estate prices as part of its new property sales tax system, a department official said on Tuesday.
Myo Min Zaw, the department’s assistant director, said the department had brought its estimation of the value of properties in Rangoon in line with market prices.
“From this year onward, we’re going to set the property values annually following market prices. If market prices go down, our estimates will go down too,” he said.
The Revenue Department’s survey found that land prices remain high in Burma’s biggest city, which has been experiencing a property boom following the introduction of reforms by President Thein Sein in recent years.
Myo Min Zaw said the highest land prices were found in Bahan Township, an area known locally as the Golden Valley where many wealthy Burmese own homes, with land on sale for about US$400 per square foot. Similar prices levels were found on prime locations in downtown townships of Kyauktata, Botataung, Pazundaung, Pabedan, Latha, Lanmadaw, as well as in Dagon and Mayangon townships.
In October 2013, the government introduced an improved property valuation method in order to estimate the value of sales on Rangoon’s booming property market and tighten tax controls.
The government also reformed and lowered its property sales tax in order to encourage more buyers and sellers to register transactions. Previously, many buyers and sellers agreed not to register the change of property ownership in order to avoid taxes.
In April this year, the government set a 3 percent tax rate for buyers of property valued at less than 50 million kyats (about US$51,000), 10 percent for properties under 150 million kyats and a 30 percent tax rate for real estate worth more than 300 million kyats (about $306,000). Sellers of property pay a flat 10 percent tax rate.
Myo Min Zaw said the new valuation that is used to levy tax on property sales was helping to increase tax revenues as the process had become more transparent.
“Tax payers can easily know how much they have to pay after buying a home. Before there were no exact rates on how much tax they had to pay, so we hope this is progress,” Myo Min Zaw said.
He added, however, that authorities did not expect that the new property tax methods would put significant downward pressure on land prices.
Zaw Zaw, a manager at Unity real estate agency, said Rangoon land prices had plateaued in recent months and that the number of property transactions was falling, in particular for residential properties.
“There were only few deals in Rangoon’s commercial areas in these months, only for business purposes. For residential areas, most luxury property deals are in very low demand,” he said, adding that a number of deals had also taken place in low-value areas on Rangoon’s outskirts, such as in North Okkalapa and North Dagon townships.
Zaw Zaw did not expect, however, that property prices would begin to fall any time soon.
The high property prices present a major problem for prospective local house buyers, with lower and middle class families struggling to buy a house or apartment.
Su Ka Byar, managing director of SECCA Products Myanmar Co Ltd, said she had been searching in vain for a modern apartment that she could afford with her salary, which she described as “good.”
“I tried to buy a condo with my budget in Yankin Township but I would have to pay 4 million kyats [about $4,000] per month for a 100 million kyat condo [$100,000], so how can I buy it?” she said.
“Middle class families, with less than a 1 million kyats [$1,000] salary, could not even buy low-cost housing in Rangoon, because they will have to pay at least 300,000 to 400,000 kyat [$300-$400] per month to buy an apartment,” she said.
“We need better a government policy than the current one, so that people can afford to own an apartment,” Su Ka Byar said.