Realtors React to New National Budget

Nov. 15, 2017, 10:47 a.m.

The National Budget 2016-2017 has certainly stirred debate and discussions, with some realtors also expressing their views on the financial provisions.
Most notably for real estate agents, the Housing Department has been allocated $25.4 million for the new financial year, which will cover several new residential and resettlement projects and upgrades.
Bayshore Real Estate director, Arif Khan noted that the $174,000 allocated for a review and implementation of a National Housing Policy was a positive step for a policy that promotes affordable and decent housing for all Fijians.
” I’m keen to see the outcome of the policy and the mandate that will have a positive effect on the economy via construction,” he said.
“The effect on real-estate will be based on the scope of the policy and the volume. Housing is a basic human need and  vital to address this need,  considering the growth trajectory of the country and rising land prices especially in urban areas.”
LJ Hooker (Fiji) principal, CJ Shergill said the budget was well balanced, and would allow proper housing for low income earners, leading to increased home ownership.
“The implementation of a housing policy has been long due, and the subsidy towards PRB could be used towards improving existing rentals.”
Allocations include a $1 million subsidy towards the Public Rental Board, which Mr Shergill said could also be used to improve existing rentals.
“There is a pent up demand for rentals especially in urban areas namely Lautoka, Nadi and Suva and since, not all individuals are able to afford market rent, it is vital to subsidize rentals in these areas,” Mr Khan added.
“The private sector as well should be encouraged via tax incentives to build apartments given the increasing need for rental units.”
He also noted that the $10 million addition to Government’s First Home Buyers Scheme would further encourage home ownership.
“The program is welcome and should continue as the Fijian dream should be to own your own home,” Mr Khan said.
“The market demand for lots and homes will increase and help homeownership for those in need of down payment assistance. This will have a positive impact on the real-estate activity and home buying.”
Vyas Deo Sharma of Khelvin Realtors shared these sentiments, though he also had reservations.
“I can see only one place that will directly benefit real estate agents- the First Home Buyers scheme, through the $5000 for first time buyers and $10,000 for first time home builders,” he said.
“If they go through real estate agents, realtors will benefit, otherwise these other projects will likely be handled through Government agencies, which will sell them and may not consider agents.”
The Budget has also  allocated 0.5 million towards a Housing Assistance and Relief Trust, with $2.6 million for development projects in Simla.
“Simla is one of the most sought after neighbourhoods in Lautoka,” Mr Khan highlighted.
“The 36 one- bedroom rental flats is a welcome to the decline rental inventory but it is through our experience that there is a negative impact on the a property owners home value located next to Public Rental Flat. Housing needs to revisit this strategy and see what is the highest and best use for the land slated for the development project.”
Mr Khan noted that the Matavolivoli development project in Nadi would be an ideal opportunity for first time buyers to continue the purchase of affordable housing in Nadi.
“There is a huge demand for housing in Nadi and since Matavolivoli is geared towards a certain tier of buyers, the current urban market activity and prices will continue in the foreseeable future,” he said.
Mr Shergill believes the housing project in Simla would equate to a housing movement in Lautoka, and an economic boost.
“The Matavolivoli development will also see properties in surrounds increase in value and boost economic activity,” he said.
New provisions in the Budget will see VAT charges for those who rent residential accommodation and earn above $100,000, with a new VAT monitoring system to soon be introduced.
A 10 percent capital gains tax will also now extend to the sales of ships and boats, as some who regularly sell property have avoided tax by declaring the properties as their principle place of residence.
Mr Khan believes that if a person has resided in a home for a minimum of two years, they should be given the benefit of declaring the property as their principle place of residence.
“If its less than two years, exemption should be extended for genuine cases of job transfer, health concerns and unforeseen circumstances such as divorce. Since there is no statistic on the number of investors who are regularly selling in this category, it is difficult to assess the true impact on real-estate activity.
“I certainly hope that it does not reduce the investor inventory into the market because a constrained inventory in urban areas will impact the price of homes.”