Taiwan's Legislative Yuan passed an amendment for Equalization of the Land Rights Act (平均地權條例, the “Amendment”) on 10 January 2023 in order to restrain speculation in the real estate market and to bring down high housing prices. This includes prohibition of flipping real estate contracts of presale or newly constructed residential units and imposition of steep penalties on market manipulators.
The Amendment focuses on the following five major measures:
- Prohibition of flipping real estate contracts
After dealing with the purchase agreement of presales or newly constructed residential units, it is prohibited for buyers to resell or transfer the purchase agreement to third parties, unless the third parties are the buyers' spouse, lineal blood relatives, or collateral relatives by blood within two generations (直系血親或二親等內旁系血親) or other extraordinary situations defined by the Ministry of the Interior. The sellers (construction companies) are also prohibited to assist with or agree to the above resale transfer. The violator will be subject to a fine from NT$500,000 to NT$3 million.
- Steep penalties on market manipulators
People who earn a profit by spreading false information about housing prices, making fake transactions to create an illusion of an active transaction, or effecting the real estate market by engaging in illegal transactions will be subject to a fine from NT$1 million to NT$50 million depending on the number of transactions.
- Report and reward mechanism
People who report violations on real estate transactions or applications of registering actual selling prices to local governments, if such reports are verified, will be rewarded with a certain share of the fines collected.
- Prior permission for purchasing residential units by private entities
In situations of private entities' purchasing residential units, depending on the legitimacy and necessity, the private entities may be required to gain prior permission by the Ministry of the Interior before purchasing. In this case, it is prohibited for the private entities to transfer or assign the properties to third parties or apply for the registration of caution (預告登記) within five years of purchasing it.
- Requirement of reporting cancelation of purchase contracts
If a purchase agreement is dissolved, the seller (construction company) is required to report the cancellation within 30 days. Violators will be subject to a fine from NT$30,000 to NT$150,000 per unit.
Amendment number 2 will be promulgated directly by the president whereas the other amendments will be decided by the Executive Yuan.
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