ABI: VAT hike would not bring property market to a standstill

The VAT hike’s impact over the property market in Romania will be indirect only, by the household income decline, but it will not bring the real estate industry to a complete standstill, said the Association of the Real Estate Brokers (ABI).
“This aspect is due to the fact that the selling prices of old apartments, don’t include VAT”, representatives of ABI said. A 5% VAT hike will have no impact over the selling prices of new apartments either.

“The value added tax applied to these selling prices remained unchanged, at 5%. New apartment prices are rarely found in the 24% range, and only for very expensive compounds”, the Association of Real Estate brokers said.

On the other hand, ABI representatives say that for the lease of a property by a natural person, no VAT is charged, so the tax hike has no direct impact over market prices, but some of the landlords may boost prices citing current economic conditions, a price boost that ABI says its is “abusive and unjustified”.

ABI expects the number of real estate transactions to increase in the coming period, both in the lease and sale segments, driven by the implementation of the solidarity tax.

The Association of Real Estate Brokers is a non-governmental organization responsible for increasing awareness and safeguarding the interests of real estate market participants.

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