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New property development proposed levy

03 July 2006 Angelo Coppola

The most recent star in some investment portfolios - property - and the news that the Housing Minister Lindiwe Sisulu's proposed 20% levy on new property developments, which would be used to subsidise low-cost housing, is likely to be built into developer

According Barak Geffen at Sothebys International Realty South Africa, this would push up prices of these new developments in the mid- to upper levels of the market and making consumers foot the bill for the levy in the end.

He feels a levy of this nature would not only deter property developers and other investors, but would also act as a deterrent to those wanting to buy into new developments, having in the past been attracted by the lack of transfer fees and their relative cheapness due to the economies of scale that are created compared to single residential units.

The levy may be a good way of filling governments low-cost housing coffers but it will make it tougher for first time homebuyers to get on to the property ladder and in so doing is likely to boost the rental market.

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