In addition to the negative impact on the budget that these measures would cause, AREI warns of cascading consequences for the entire real estate ecosystem in Romania, as well as the effects that would have an impact on the population.
The abolition of the 5% VAT rate on housing will strongly affect people with low incomes, especially young people and families with many children, who will no longer be able to afford the purchase of new buildings. For example, for a 2-3-room apartment, an increase in the VAT rate to 9% will result in additional costs of €4,800 plus notary fees calculated from the total purchase value, in addition to the already registered 12% housing price deposit. in less than 2 years.
Increased financial pressure could also force some developers to compromise on the quality of materials used in construction. Also, developers could be forced to reduce the size of the housing units in order to be able to maintain the affordability of the apartments. This could lead to a saturated market for smaller apartments, Romania already shows a significant difference to other EU member states with the lowest average number of rooms per person and the highest percentage of people living in overcrowded housing units.
Risks to consider are also increased tax evasion and a reduction in supply and demand of at least 50%, AREI says.
The association also notes that the re-introduction of the Social Security Contribution Quota (CASS) on construction wages would reduce net wages in the sector by around 11.1% and would mean a large compensatory effort in favor of developers/builders, increasing pressure on their costs.
In terms of fiscal measures, a more balanced approach is needed to avoid disproportionate impact on the real estate sector and Romanian citizens' real estate prospects, says Dennis Selinas, president of AREI and CEO of Globalworth. .
The AREI community brings together the most important companies with significant development projects in the real estate market in Romania and combined investments worth billions of euros: AFI Europe Romania, Akcent Development, Alesonor, Argo Property Capital, Avivim Gonen Group, Bog'Art, Ceetrus Romania, Cordia Romania, CPI Romania, Estoria City, Forte Partners, Globalworth, Granvia Romania, Hercesa Imobiliara, Lion's Head, Mulberry Development, Mitiska REIM, Nepi Rockcastle, One United Properties, Portico Investments Romania, Portland Trust, Prima Development Group, Skanska, Speedwell, Square 7 Properties, Tiriac Imobiliare.
In recent developments, Romanian real estate investors have raised their voices in concern, pointing out the potential negative effects of the proposed fiscal measures on state budget revenues. These investors fear that the implementation of these measures could have an adverse impact on the real estate sector and subsequently affect the financial inflow to the state treasury.
Understanding concerns:
The proposed fiscal measures have sparked significant debate in the Romanian real estate community. Investors fear that these measures could lead to a loss of state budget revenue due to their potential to create a less favorable investment environment. The impact of these measures is of particular concern as the real estate sector plays a vital role in contributing to the country's overall economic growth and stability.
Possible consequences for state budget revenues:
The concerns of Romanian real estate investors stem from the possible consequences that the proposed fiscal measures could have on the revenues of the state budget. If enacted, these measures could potentially discourage both domestic and foreign real estate investment, leading to a reduction in transactional activity and subsequently impacting revenue generated from real estate transactions and related taxes.
Maintaining a balanced approach:
While fiscal measures are often introduced to increase revenue streams for the government, it is essential to strike a balance that does not hinder the growth and vitality of key sectors such as real estate. Romanian real estate investors emphasize the importance of carefully assessing the potential consequences of these measures and considering alternative solutions that will protect state budget revenues without limiting investment opportunities.
Concerns raised by Romanian real estate investors about the potential loss of state budget revenues as a result of the proposed fiscal measures underscore the complex relationship between fiscal policy and economic sectors. As stakeholders continue to engage in discussions and negotiations, it remains critical to prioritize a comprehensive approach that preserves both the fiscal health of the government and the growth potential of the real estate market. Being informed about these developments is essential for anyone investing in or interested in the Romanian real estate landscape.
In a significant development, Romanian real estate investors are expressing their concerns about the possible consequences of the proposed fiscal measures on state budget revenues. The concerns come amid debate over the economic implications of the proposed fiscal changes.
Concerns stem from the potential impact these fiscal measures could have on the state's ability to generate revenue. Investors, as participants in the real estate sector, fear that these measures could adversely affect their investments and subsequently affect the inflow of the state budget.
The proposed fiscal measures, if implemented, could lead to a number of outcomes that may destabilize the real estate market. This includes a possible decline in real estate transactions, reduced investor confidence and a potential slowdown in the growth of the sector. These changes could subsequently lead to a reduction in tax contributions from the real estate sector, thereby affecting the total revenues of the state budget.
Real estate investors emphasize the need for a thorough assessment of the impact of proposed fiscal measures before they are adopted. They emphasize that it is important to consider the possible risks and benefits of such changes, especially in terms of their impact on the state budget.
In short, Romanian real estate investors highlight their concerns about the proposed fiscal measures, citing the potential loss of state budget revenue as a significant concern. The potential impacts on the real estate sector and the overall economy require careful analysis and consideration before any final decisions are made.
As discussions continue, the effects of these fiscal measures on state budget revenues and the real estate sector remain at the forefront of economic considerations in Romania. Stakeholders eagerly await the outcome of these discussions and subsequent decisions that will shape the country's economic landscape.
As discussions about the proposed fiscal measures continue to gather momentum, Romanian real estate investors are expressing their concerns about possible adverse effects on state budget revenues. The proposed fiscal changes have created a wave of uncertainty in the real estate sector, leading to fears of possible financial losses. In this article, we delve into the views of Romanian real estate investors and explore the potential implications of these proposed measures on state budget revenues.
Concerns of real estate investors: Romanian real estate investors are concerned about the potential negative consequences of the proposed fiscal measures on state budget revenues. These concerns stem from the complex relationship between fiscal policy and the real estate market, which plays a significant role in contributing to the overall pool of income.
Impact on investment confidence: Uncertainty surrounding the proposed fiscal measures may erode investor confidence in the Romanian real estate market. Investors often look for a stable and predictable fiscal environment to make informed decisions. Any perceived threat to the stability of fiscal policies could lead to a reduction in investment inflows, which would subsequently affect state budget revenues.
Possibilities of market downturn: The implemntation of drastic fiscal measures can potentially trigger a downturn in the real estate market. A slowdown in real estate transactions and a decline in real estate values could result in reduced state tax revenues. This scenario highlights the delicate balance between fiscal adjustments and their potential impact on the broader economy.
Multiplicative effect on the state budget: The interconnectedness of fiscal policies and the real estate market cannot be underestimated. A reduction in real estate activity can lead to a cascading effect on related industries such as construction, finance and services. As these sectors shrink, the state could see reduced tax revenues, exacerbating the problems facing the budget.
Need for Collaborative Solutions: Romanian real estate investors emphasize the importance of a collaborative approach between government and stakeholders. Constructive dialogue and a transparent decision-making process can help address concerns and uncertainties and support an environment conducive to sustainable economic growth and fiscal stability.
Concerns expressed by Romanian real estate investors about the potential loss of state budget revenues as a result of the proposed fiscal measures highlight the complex interplay between fiscal policy, the real estate market and overall economic stability. As policymakers consider these changes, careful consideration of the long-term impacts on investment confidence, market dynamics and related industries is paramount. By engaging in open communication and seeking collaborative solutions, Romania can address these challenges and pursue a balanced fiscal approach that supports revenue generation and economic growth.
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