Transfer tax adjustment not yet effective

Any tax reform proposed earlier this year must go through the appropriate legislative process. This was reiterated once again by the Minister of Finance and Public Enterprises, Iipumbu Shiimi, who suggested that the ideal would be for people who buy properties to be able to do so in October this year without having to pay transfer fees.

Earlier this year, while presenting the national budget, he announced that transfer and stamp duty tranches will be adjusted for inflation. Accordingly, the exemption level would be raised from N$600,000 to N$1.1 million, as a measure to support improved access to housing.

“The political decision has already been made, but these amendments are laws and have to go to Parliament. We have done the drafting part and now the legal writers are busy with it to adapt it to the legal language. I hope that this law will be approved by Parliament in October and that people will not pay transfer fees if the price is lower than the established amount,” Shiimi added.

The minister was speaking during an update on ministry developments at the Government Information Center this week.

During the budget statement in early March, he said the threshold to trigger the 8% transfer duty rate will be increased to N$3.15 million from the 2024/25 financial year. In addition, a transfer tax and stamp duty will be introduced for luxury residential properties costing more than N$12 million.

In Namibia, access to housing remains essential, especially in urban areas. The country is struggling to provide adequate housing, mainly due to a lack of developed land. The shortage of new housing in cities has caused real estate prices to rise, especially in urban areas.

According to the latest report on the FNB House Price Index prepared by the bank’s economist, Ruusa Nandago, the total house price nationwide stood at N$1,214,674 during the fourth quarter of 2023.

It noted that transaction volumes remain in contraction for the sixth consecutive quarter, with a 12-month average growth of -19.1% at the end of the fourth quarter of 2023.

“The residential real estate sector continues to be the most affected by the high price and interest rate environment, as seen in weak purchasing activity in all regions. We maintain our view that the residential real estate market will remain constrained as obstacles to affordability persist. Supply problems continue to be an important limitation for purchasing activity in the market,” said the FNB economist.

Nandago warned that an increase in the supply of developed land and, consequently, the housing stock is crucial for the growth of the residential real estate market.

Additionally, the FY 2024/25 budget allocated a total of N$700 million for informal settlement upgrading, mass land services and other programs to improve national access to housing opportunities.

[email protected]