Minister of Public Works and Housing (PUPR), Basuki Hadimuljono, has finally introduced long-awaited new regulations concerning the adjustment of selling prices for subsidized house, which developers have eagerly anticipated for the past three years.
These eagerly anticipated regulations are encapsulated within Ministerial Decree (Kepmen) PUPR Number 689/KPTS/M/2023, titled “Limitations of Land Area, Floor Area, and Price Limits for Public Houses on Sites in the Implementation of Housing Credit/Financing through Housing Financing Liquidity Facility, as well as the Amount of Subsidies for Down Payments on Housing (SBUM).”
This new policy represents a significant change from the previous regulations governing the price limits for public houses on sites and the adjustments made to the regions eligible for SBUM, which were initially outlined in Ministerial Decree PUPR Number 995/KPTS/M/2021.
With the signing of this Ministerial Decree on June 23, 2023, the eagerly anticipated regulations can now be officially implemented by developers of subsidized housing projects across all regions. Notably, the Ministerial Decree specifies the price limits that will be in effect for the years 2023 and 2024.
The Ministry of PUPR, in accordance with the provisions outlined in Ministerial Regulation PUPR Number 35 of 2021, holds the authority to facilitate and provide housing financing assistance to low-income communities (MBR). This underscores the government’s commitment to supporting affordable housing initiatives.
Moreover, it is crucial to note that the regulations related to the selling price of land houses, which are exempt from Value Added Tax (VAT), were first established through Ministerial Regulation Number 60 of 2023, issued by the Ministry of Finance. These regulations laid the groundwork for granting VAT exemptions to eligible subsidized houses.
Under the provisions of the Ministerial Regulation, each subsidized house is entitled to a VAT exemption, which amounts to 11 percent of the selling price of the land house. This translates to a subsidy range of IDR 16 million to IDR 24 million per unit, significantly easing the financial burden for prospective homebuyers.
The newly introduced Ministerial Decree sets forth the revised maximum selling price limits for VAT-exempted land houses. For the years 2023 and 2024, the maximum selling price limits are established between IDR 162 million and IDR 234 million, and between IDR 166 million and IDR 240 million, respectively, for each specific zone. These adjustments aim to ensure affordability and accessibility to subsidized housing across different regions.
In comparison to the previous regulation, which set the maximum price limits for VAT-exempted land houses between IDR 150.5 million and IDR 219 million, the revised limits reflect an increase. This adjustment aligns with the average annual construction cost increase of approximately 2.7 percent, as determined by the Wholesale Price Index.
The implementation of these regulations is expected to have a significant impact on the subsidized housing sector, ensuring that low-income communities have access to affordable housing options while fostering sustainable development and addressing the housing needs of the population.