A model replica of a condo project is presented at a property expo. (Bangkok Post photo)

The government is advised to ease lending restrictions and reduce interest rates as newly completed condo units worth more than 86 billion baht are awaiting transfer in the fourth quarter, which could lift both the property sector and the entire economy, says the Thai Condominium Association.

Prasert Taedullayasatit, president of the association, said the transfer value in the fourth quarter alone could be equivalent to the total value from the first three quarters combined.

“This figure only accounts for large developers, excluding small ones,” he said.

“It’s a significant amount that will help revive the property market and ultimately stimulate the economy through the sector’s multiplier effect.”

Mr Prasert said easing loan-to-value limits and cutting interest rates could facilitate the transfer of these condo units as both measures would lower the mortgage loan rejection rate, which has risen to 80%.

“The more units that can be transferred to buyers, the more developers can use the proceeds to pay off their debts,” he said.

“Most developers rely on debentures to fund their projects, but they can no longer issue new debentures.”

The proceeds from condo transfers will not only be used to pay financial creditors, but also to suppliers of construction materials, which will help sustain the businesses of both developers and their suppliers, said Mr Prasert.

As local demand remains weak amid a sluggish economy, he said Thai properties are reliant on foreign demand.

However, Mr Prasert suggested stricter regulations should be imposed on foreigners, particularly concerning the use of nominees, which has long been a thorny issue.

“Foreigners own Thai properties through nominees in destinations such as Phuket, Pattaya and Bangkok, with a combined value exceeding 1 trillion baht, accounting for two-thirds of the total,” he said.

“If this group is brought into the tax system, Thailand could generate substantial revenue.”

The association proposed the government implement a 4% transfer fee and a 0.3% property and building tax, the maximum rate, through leasehold ownerships of 60-80 years for foreign buyers.

In addition, the foreign ownership quota for condos should be increased from 49% to 75%.

These measures would help generate significant income for the country amid weak demand from local buyers, said Mr Prasert.

“The property market in the first half this year was very weak, but developers have quickly adapted,” he said.

“Some reduced new launches in the second half, while others even returned booking deposits to buyers after launches. Now it’s the government’s turn to step in and help.”