Cheap homes on state land to be capped at B1m a unit

Cheap homes on state land to be capped at B1m a unit

Prices of low-cost homes to be built on state land under the Pracha Rat initiative will be capped at 1 million baht per unit, the Treasury Department's chief says.

The affordable homes to be developed on six state land plots will seek the cabinet's approval next week, the director-general of the Treasury Department Chakkrit Parapantakul said.

The department has flagged six state land plots, two of them in Bangkok, for construction of the low-cost homes. The first low-cost housing projects to be developed on state land in Bangkok will be built on a plot behind the former site of the Royal Mint on Pradiphat Road and on Soi Wat Phai Ton in Phaya Thai district.

The cheap homes to be developed on state land will be of two types -- leasehold and rental, he said.

The department plans to develop four plots in Chiang Mai, Chiang Rai and Phetchaburi's Cha-am district and offer people a 30-year lease.

Under the project, a condominium unit will have at least a 24-square-metre space, while houses will have an area of no less than 48 sq m.

For the low-cost homes to be developed for rent, it will offer a five-year rental period and new tenants will replace the current ones after their contract lapses.

Tenants must have a monthly income not exceeding 20,000 baht, he said, adding that tenants will be charged no more than 4,000 baht a month with the rental rate adjusted every five years.

The two state land plots in Bangkok will be developed for low-cost homes for rent, he said.

Previously, the Treasury Department mulled renting the low-cost homes on a yearly basis, but it changed its mind as such a short rental period may not attract tenants to buy furniture and it would not create a circular flow in the economy, he said.

The scheme initiated by the Prayut Chan-o-cha administration is aimed at helping eligible participants afford a 30-year lease or mortgage on a home. The low-cost homes are developed on both state land and private sector land but prices must not exceed 1.5 million baht per unit if they are developed on private sector land and lower if they are developed on state land.

Mr Chakkrit said investment for the six projects was estimated at 3 billion baht in total with construction to be completed two years after the cabinet gives the nod.

To help low-income earners to be able to afford low-cost homes, the government has assigned two state-owned banks -- the Government Savings Bank (GSB) and GH Bank -- to offer a 40-billion-baht mortgage. The housing loans have received a warm response from buyers.

The GSB said last week that almost 30,000 potential borrowers have sought loans worth more than 20 billion baht, while GH Bank had 15,400 applicants for mortgages worth 13.1 billion.

Under the mortgage scheme, both banks charge no interest for the first year, 2% for the second and third years, 5% for the fourth to sixth years and floating rates for the remaining period.

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