Hainan authorities urged to levy taxes on vacant homes to curb speculation
Political advisers in South China's Hainan province urged authorities to levy taxes on vacant homes in popular travel destinations to discourage speculation and cool the island's overheated property market.
The vacancy rate among residential buildings in Hainan has become alarmingly high because many non-residents have flooded the property market to buy winter vacation homes and investment properties, said Wang Yiwu, a member of the Chinese People's Political Consultative Conference Hainan Committee, on Saturday during the committee's ongoing annual plenary meeting.
"About 80 percent of the new residential buildings in cities such as Haikou and Sanya are vacant, according to my research on the property market in Haikou and Sanya," said Wang, who is also an economics professor from Hainan University.
Liu Huizhen, who works for a property maintenance company in Haikou, the capital of Hainan, said about 450 out of 500 apartments in the neighborhood she works for are owned by people who are not from the island, and about 200 homes are often vacant.
The market for winter homes has become very lucrative, said Dai Hong, another member who attended the committee's annual meeting, which concluded on Sunday.
"Many developers are keen on building high-end property projects in Hainan that target these well-off outsiders," Dai said.
The price increase resulting from the property boom hurts the local population, Dai said.
"When locals cannot afford them and non-locals can afford them but often do not live there, then a high vacancy rate is inevitable," Dai said.
Liu Shengnan, a property salesperson in Sanya, a popular tourism destination in the province, said on Saturday that nearly all of the buyers for her company's commercial residential buildings near Haitang Bay are not permanent residents.
Her company's project contains 358 apartments sized from 80 square meters to 220 square meters, and the average price is 30,000 yuan ($4,770) per square meter, she said, declining to reveal the exact number of apartments that have been sold.
According to the latest report released by the China Index Academy, a Beijing-based real estate consultancy, the average home price was estimated at 8,326 yuan per square meter in Haikou in January.
"It's impossible for me to afford a two-bedroom apartment with a monthly income of 1,000 yuan," said Liu Huizhen, the property management agent, who is a 24-year-old Haikou native and plans to get married late this year.
Professor Wang said that the rising purchasing power of mainlanders has accelerated the rise of housing prices in Hainan.
"Because our local residents' incomes have not increased so rapidly, this trend will hurt the quality of life and rights of local people if it is not effectively curbed," he said.
He said the high vacancy rate has also led to a waste of land resources and public services.
Liu said that the issue has also complicated her company's day-to-day work and even led to losses.
"It is really difficult for us to handle the situation when water leakage, electricity leakage and burglaries occur in those apartments. What's worse, our company has to prepay the fees that the government requires, such as fees for garbage disposal. The money cannot be returned if no one lives in those homes," she said.
Wang suggested that the local government should tax homes with high vacancy rates to crack down on property speculation. It should also simultaneously encourage the construction of more public rental apartments to accommodate low- and middle-income residents.
Dai suggested that the government should tax a residential home if it remains vacant for two years or longer, and the tax on a vacant home shall be assessed annually at the rate of 1 percent of the standard value of the building and increase year by year.
In a work report that he delivered to the annual plenary session of the provincial people's congress on Thursday, Jiang Dingzhi, acting governor of Hainan province, pledged to build 75,500 government-subsidized homes in 2012.
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