Newsletter
Amendments to the Regulations on Permission for Private Entity that Purchases a Residential Property
Considering that private entities do not have a need for housing in general, the Regulations on Permission for Private Entity that Purchases a Residential Property (the “Regulations”) prohibit private entities from acquiring residences unless specific criteria are met, so as to prevent private entities from using residential properties for investment or property speculation. It has been nearly one year since the Regulations took effect on July 1, 2023. In order to adjust the mechanism for private entities to acquire residential properties in response to the practice, according to Ruling No. Tai-Nei-Di-Zhi-1130262565 issued by the Ministry of the Interior, the amendments to Articles 4, 14, and 16 of the Regulations took effect on May 17, 2024 (the “Amendments”). Below are the main provisions of the Amendments:
1. Additional restrictions on private entities acquiring residential properties for dormitory use
Pursuant to Subparagraph 1, Paragraph 1, Article 3 of the Regulations, private entities may apply with the Ministry of the Interior to acquire residential properties for dormitory use. However, this provision has been abused; for example, there were applications for the acquisition of luxury residences for dormitory use. In response, the Ministry of the Interior included additional restrictions under the Amendments (Article 4):
(1) The cap on the number of properties specified under Paragraph 1, Article 4 of the Regulations was set on the “number of properties purchased,” nevertheless, the provision has been revised to the “number of properties obtained.” That is, the cap on the number of properties applies not only to those acquired by “purchase,” but also to those “obtained” by private entities by means other than purchase before the implementation of Article 79-1 of the Equalization of Land Rights Act.
(2) In principle, private entities may only acquire built properties for dormitory use. However, a private entity may apply to the Ministry of the Interior for an exemption if it intends to acquire pre-sale properties due to a large demand for dormitories arising from facility relocation or operational plans.
(3) To prevent private entities from purchasing luxury residences under the pretense of acquiring properties for dormitory use, the Amendments stipulates that the purchase price of a property acquired by a private entity for dormitory use must not exceed that of a “high-priced residence” defined under the Regulations Governing the Extension of Mortgage Loans by Financial Institutions (i.e., NT$70 million in Taipei City, NT$60 million in New Taipei City, and NT$40 million in other areas of Taiwan according to the current regulations).
(4) To ensure that a private entity that has been permitted to acquire residential properties for dormitory use has indeed maintained a stable and long-term employment of a certain number of employees requiring the use of a dormitory, the Amendments stipulate that such private entity should have at least five employees every month (as evidenced by the number of employees enrolled in the labor insurance scheme) and that such private entity should have been incorporated and enrolled its employees in the labor insurance scheme for at least one year.
2. Transfer registration requirement for private entities acquiring residential properties for rental operations
Subparagraph 2, Paragraph 1, Article 3 of the Regulations allows private entities engaging in Real Estate Leasing business (i.e., enterprises that have registered H703100 Real Estate Leasing as one of their business items) to “acquire residential properties for rental operations.” To prevent private entities from using this provision to circumvent the requirement for a minimum number of properties/units held (i.e., five properties/units, as stipulated under Paragraph 2, Article 5 of the Regulations), Article 14 of the Amendments stipulate that when a private entity “acquires a residential property for rental operations,” as permitted under the Regulations, the private entity must also apply for the registration of the title ownership.
In addition, amendments to Appendix 1 of the Application Form and the Usage Plan for Private Entity that Purchases a Residential Property took effect along with the Amendments. Certain tables and items have been added; for example, the commuting distance and time between the workplace and the employees' dormitories.
Given that the Amendments prescribe further restrictions on private entities’ acquisition of residential property, private entities are advised to take the Amendments into consideration when planning to acquire any residential property.