Home loans may become prohibitive
BANDAR SERI BEGAWAN
Bank association to meet if it is sure Building Tax covers residences
HOME buyers may find their choices of future residences narrowed by the new Building Tax which, once and if applied on residential buildings, may cut the amount of home loans they can take out from banks.
Banks, however, have yet to receive clear notices on whether they will have to begin assessing home loan borrowers' capability to pay with the new tax as an added factor.
A manager from a local bank said that should it become clear that the tax affects residential homes, then a meeting will most likely be convened among members of the Brunei Association of Banks so they can come up with a policy on whether to incorporate the tax into the home loan process.
"The process for the banks would depend on the individual's salary scale and that would determine how much they are eligible to loan," the bank manager said. If this loanable amount is lower than the net price of the house, it is up to the borrower to produce the additional money, he added. "It works like a credit card. If you are entitled to a $3,000 credit card limit, after deducting the processing fee, you may use roughly about $2,900 of the amount," said the manager. He added that he is unable to make any further comment on the matter as nothing has been confirmed yet.
At Standard Chartered Bank, the minimum monthly income for home loan application is $1,500, and for income earners below the minimum monthly salary, the bank assesses them on a case-to-case basis, factoring in joint income.
"In these cases we would certainly help and for our home loan process, we offer subsidies that will cover legal fees, Mortgage Reducing Term Assurance and processing fees of up to $8,000 depending on the loan amount," said Lim Yu Kwang, the head of small and medium enterprises at Standard Chartered Bank.
"We are still understanding this (the new Building Tax) in more detail and it has not impacted the way we do business (yet)."
A local bank manager said: "I believe that every bank has its own procedures with regard to home financing". In general most banks require the identification card details, the individual's salary slip, confirmation of employment (from either the private or public sector), the land title deed, the agreement documentation with regard to sales and purchase of the property and so on.
For the process, a submitted standard documentation to the bank is required whereby the bank will access the applicant's maximum financing entitlement. The newly gazetted Building Tax states that it would affect property in Pusat Bandar and out of Pusat Bandar.
In Pusat Bandar areas, commercial buildings and offices, it would be between $10.80-$12.90 per sqm/month, commercial buildings for residential properties between $5.40-$8.60 per sqm/month and residential buildings or homes at $2.20 per sqm/month.
Out of Pusat Bandar, the commercial buildings or offices would be subject to a tax of $8.60 per sqm/month, commercial residential buildings at $4.30 per sqm/month and residential buildings or homes at $1.10 per sqm/month.
The Brunei Times