[520 Review Tsai Ing-wen - Housing Policy] "Three Arrows in the Housing Market" is missing two arrows, active social housing, passive reform

(This article was invited by Key Comment Network before Tsai Ing-wen took office in May 2020)

President Tsai Ing-wen's first term as president is coming to an end, and a very important part of his policy proposition is the "Safe Housing Project" to reform housing issues, also known as the "Three Arrows of the Housing Market": to put an end to speculation in the housing market and improve rental housing system and build 200,000 social houses.

Now, four years later, have these housing policies been achieved? In conclusion, the policy direction of "Three Arrows in the Housing Market" is correct, but its implementation only focuses on social housing. Even if the efforts and performance of the promotion are worthy of recognition, it is still unable to address the structural issues of difficult housing as a whole, and even aggravate the promotion of social housing. difficulty.

Directly build social housing: give affirmation and keep working hard

The most well-known among the three arrows in the housing market is the "200,000 households in eight years". But in fact, in the planning, only 120,000 households are "directly built", and the other 80,000 households are through "chartered escrow", that is, the business owners assist in the management or subletting of existing private residences (especially those with spare houses). part), allowing vulnerable people to rent in the rental market.

And so far, how is the implementation of this plan going? According to the "Social Housing Development Plan", the goal of 200,000 households in eight years is divided into two phases, among which the target corresponding to the first phase (106 to 109) of the current term of the Cai government is "40,000 households directly Construction, 40,000 households are leased and managed.”

The data on the number of social housing directly built up to April 109, including the number of existing, newly completed, under construction and to-be-started (deducted from planning), has reached 38,125, which is indeed very close to the target of 40,000. , must affirm the efforts of the central and local authorities.

However, if you look closely, you will find that counties and cities other than Liudu originally planned to build 3,826 households in the first stage. In fact, these counties and cities currently have only 102 "existing, newly completed, under construction and pending" households, and even if they are added to the planning, there are only 539 households.

The key lies in the two major issues of "energy" and "land". In the current division of labor in the construction of social housing, although the central government can provide assistance in finance, land acquisition, financing channels, and legal regulations, the specific planning and construction and service provision still need to rely on the local government. Under the circumstance of insufficient capacity or willingness of local government agencies, the construction progress of social housing will be affected.

Faced with these circumstances, the central government is also preparing to directly build social housing through the National Housing and Urban Renewal Center. However, whether the capacity of the center is sufficient to undertake the complex planning and construction work remains to be tested.

In terms of land, even among the six capitals with relatively abundant resources, in 2019, Taichung City also saw the auction of a large number of social housing reservations to builders [1] , and Taipei City also announced that due to "too many empty houses and insufficient public land" ”, greatly reducing the number of social housing construction in the future [2] .

And it is also public land. Different agencies, locations, and areas still have differences in the difficulty of obtaining and whether they are suitable for building social houses. Therefore, in the future, when the land that is "easy to obtain and suitable for building social houses" is gradually planned and constructed, it will be necessary to continue to build social houses. getting harder.

Chartered escrow house: the structural dilemma remains unsolved, and the results are less effective

Part of the number of direct construction is still up to the standard, but the number of leased and managed social housing is not optimistic. Since the chartered escrow must complete 80,000 households in eight years, the efficiency must increase at the rate of "10,000 households a year".

Therefore, 2.27 billion central funds have been invested in the "106-year chartered and escrow project", and it is estimated that 5,000 households of "chartered and escorted" and "lease and escrow" will be completed within a year, for a total of 10,000 households. Target. But the actual result is that in the two-year plan, the number of "rental and escrow" and "rental and escrow" only reached a total of 5,157 households, that is, it took twice as long as expected, but only half of the results.

Are the resources invested not enough? However, since the chartered escrow is a three-party subsidy for the landlord (notarization fee, repair incentive, insurance fee, tax reduction), tenant (rent subsidy), and business operator (development fee, escrow fee, guarantee fee, and matching service fee), the cost of It is far more expensive than the direct construction of social housing, and even more than twice the rent subsidy, and the resources invested are not too big.

With such a huge investment of resources, why is there still no way to smoothly promote the chartered escrow? The key is that "the reform of the supporting system is not in place", resulting in expensive housing development and limited performance. If the chartered escrow is to achieve progress, the housing source can only be found from "vacant houses" or "existing rental houses".

In terms of vacant houses, the core problem is that Taiwan's property ownership tax is "extremely low in effective tax rate." The nominal tax rate of domestic real estate tax is about 1%, which is not much different from the international standard. However, due to the serious underestimation of the announced land price and the current value of the house assessment (about 10% of the actual price), the actual effective tax rate is only about 0.13%. , resulting in the so-called "taxes for a house are lower than for a car". Since the cost of housing hoarding is so low, the concessions offered by chartered escrow cannot attract vacant houses to be released in the absence of rental income.

If vacancies do not work, what about existing rentals? In theory, escrow escrow provides a lot of discounts, which should be a benefit to landlords who already have rental houses, and can also save you the trouble of managing rental houses.

But in fact, because the current rental market in Taiwan is an "underground market", most small private landlords do not pay the corresponding taxes for renting their houses, so most landlords dare not participate in the chartered escrow plan to avoid renting in the past few years. After the facts of the house are exposed, there is a risk of paying back taxes and fines. Besides, there are no free discounts for discounts, and no tax evasion benefits for tax cuts. For most landlords, these incentives are really meaningless.

The author once attended a meeting and heard officials say that there was only one landlord at a landlord’s briefing, and the officials tried to persuade him by himself. Finally, the landlord was moved and thought it was a good thing to join. But if this offer is so useful, how come there is only one host?

Therefore, if the supporting system has not been reformed, even if the government has prepared to spend another 3.46 billion yuan to launch "Chartered Escrow 2.0" to increase the incentives, I am afraid that it will be as effective as the current chartered escrow.

Three arrows in the housing market: the direction is right, but two arrows are missing

Going back to the beginning of the article, social housing is only "one of the arrows". The current housing dilemma in Taiwan cannot be resolved through a single policy, but should be addressed according to different aspects of housing demand. The reason why the author believes that the “three arrows” of the housing market is “in the right direction” is precisely because it has responded positively to the core housing problems in Taiwan in terms of policy, that is, buying a house “can’t afford it”, renting a house “not good enough”, and social housing “can’t get it.” to” the comprehensive predicament.

So where are the other two arrows of the "Three Arrows of the Housing Market"? Looking back on the political views of the year, the three arrows in the housing market, "to put an end to the speculation in the real estate market," corresponds to the problem of high housing prices in the housing market. With "correction of unreasonable tax bases" and "transparency of market information" as the core of the arrows, we will improve the current deception and speculation, Severely vacant houses and market distortions.

The "improving the rental system" is based on the "enactment of a special rental law" as the core, and improves the long-ignored rights and interests of renters by enhancing rental assistance and strengthening dispute resolution, and improves the affordability of rental housing sex and stability.

The reform of the three arrows in the housing market is not isolated from each other. If only one of the reforms is emphasized, it will be difficult to solve the fundamental problem in addition to getting twice the result with half the effort. Taking the situation of Hong Kong as an example, the proportion of social housing (public housing) in Hong Kong is the highest in Asia, and social housing accounts for 30% of its housing stock (Taiwan only accounts for 2.2% of the housing stock after the completion of 200,000 units in eight years). Hong Kong is also a famous living hell in the world due to the fact that its housing market and rental market are completely free to hype and have no control. In addition to the extremely high housing prices, the quality of rental housing is also full of all kinds of bad things.

But today, four years later, it can be seen that apart from the government's active efforts to build social housing, the other two arrows seem to have disappeared as if they have no sense of existence.

Information transparency reforms such as "Real Price Registration 2.0" should effectively expose the shady information of the current pre-sale house transaction information, so as to improve the current consumers' inability to know the real price registration price of pre-sale houses, and even be deceived by the industry. , and even the predicament that affects the prices of new and old houses. However, it is very regrettable that after the draft of "Net Registration 2.0" was sent to the Legislative Yuan by the Executive Yuan in 2018, it was shelved and returned, and only the castrated version proposed by Zhang Honglu and other members was passed [3] , which is like a bounced vote.

Real-value registration 2.0 At least the government has drawn up a draft, and the tax reform will be even more stagnant. Not only is there a long way to go to levy a holding tax at a real price, but even the more moderate "hoarding tax reform" aimed at people with multiple houses has only been proposed by the forces of the times and the Taiwan People's Party. Evaluate.

The improvement of the rental housing market has also encountered the same situation. Although the special rental law has been passed through legislation, the main content is to regulate the lease and escrow industry, and there are few constraints on the general self-employed landlord. Even though the terms "should be agreed and must not be agreed" in the rental contract are listed, but there are no relevant penalties, making the relevant norms reduced to moral persuasion, and tenants are still very limited in their rights and interests such as tax credits and rent subsidies.

Due to the stagnation of the reform of the housing market and the rental housing market, driven by such a "partial eclipse" policy, the number of people who need social housing will continue to increase. Even if the government actively builds social housing, it will inevitably be difficult to support alone. 20,000 households are still unable to meet the living needs of the people; at the same time, because there is no way to reasonably adjust the holding cost of the house (negative incentives), even if a large number of preferential incentives (positive incentives) are provided, it is difficult for the chartered escrow to successfully achieve the goal.

Conclusion: Social housing is on track, but there is still a lack of institutional reform

Therefore, the author still affirms the government's serious investment in social housing and other subsidy policies, but still must reiterate that social housing alone is definitely not enough.

First of all, at a time when social housing is already on track, the Cai government should show courage in its second term to carry out sufficient reforms on the market system to deal with the deeper housing predicament. These reforms will also feed back the construction and operation of social housing, and in the process of normalization and improvement of the market, the demand for social housing can also be relatively reduced.

In addition, the protection of the right of residence through subsidies must also be handled in more detail. Although the government has announced that the rent subsidy will be expanded to 120,000 households starting this year, the competent authority has not yet set an "affordability benchmark" in accordance with the "Housing Law". Chaos is not fair, and there is a serious problem of "subsidizing what is not needed, but not enough for what is needed" [4] .

If the first term of the Tsai government is to "seek what is good first", and increase the number as the first consideration; then in the new term, it is also time to challenge the deep-water area of reform and think about how to make subsidies more detailed and perfect .

[1] https://opinion.udn.com/opinion/story/12838/3921249

[2] https://opinion.udn.com/opinion/story/12838/3779029

[3] https://opinion.udn.com/opinion/story/12838/3836820

[4] https://opinion.udn.com/opinion/story/12838/4409342